Royal Dutch Shell now appears to have chosen buyers for three of the four onshore Nigerian license stakes it is selling, with unconfirmed reports from bidders suggesting a last-minute upset on the OML 42 block.
A consortium of India’s Essar, Nigeria’s Energy Equity Resources (EER) and South Africa-listed SacOil had been the front-runner for OML 42, purely on the basis of its $600 million-$650 million bid. But sources say Nigeria-listed Forte Oil (previously known as African Petroleum) has now clinched the deal by bidding just $50 million or so shy of the Essar group and, crucially, being able to demonstrate support for its offer from the local Ijaw community.
All four blocks are in the northwestern part of the Niger Delta, with Shell selling its own 30% interest alongside the 10% held by Total and 5% held by Eni. The remaining 45% is owned by Nigerian National Petroleum Corp. (IOD Feb.21,p1).
Shell has already chosen locally owned Niger Delta Exploration and Production (NDEP) as the buyer for gas-rich OML 34. The bid from NDEP, which is backed by African oil and gas investment group
Petrolin, is worth around $280 million.
A consortium combining Starcrest Nigeria — a subsidiary of the indigenous Chrome Group — and privately held, UK based Eland Oil is set to buy OML 40 with an offer thought to be worth around $150 million. The bid is backed by an innovative financing deal put together through London-based financial advisor Matrix Capital. The equity-type funding package is sufficient to cover both the acquisition cost and also development financing, and has been subscribed to by major London equity investment funds, rather than risk-hungry hedge funds — the more traditional market
for such offerings.
The fourth block, OML 30, is believed still to be wide open, with Shell playing at least three “preferred bidders” off against one another. Locally linked Oando and First Hydrocarbon Nigeria (FHN) — which is owned 45% by London-listed Afren, but also has reported backing for its bid from London-listed Dragon Oil — are still in contention. Both appear to have strong technical bids, but their financial offers are said to fall short of competing bids from — depending on the source — locally owned PanOcean Oil, locally owned Conoil or even UK-listed Heritage Oil bidding with local service company Shoreline Energy.
Shell itself is making no comment beyond confirming that it is selling four fields in the Niger Delta. But given the feeding frenzy for the stakes among companies and financiers alike, sources say the Anglo-Dutch supermajor is moving forward with plans to sell another portfolio of Niger Delta licenses held by Shell Petroleum Development Co. This next tranche of fields are all said to be in the eastern Niger Delta.
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