Shell seeking to sell Niger Delta licenses

Aug. 12, 2021
Shell has started the process to divest all operated joint venture licenses held by the Shell Petroleum Development Co. in Nigeria, according to Wood Mackenzie.

Offshore staff

LONDONShell has started the process to divest all operated joint venture licenses held by the Shell Petroleum Development Co. (SPDC) in Nigeria, according to Wood Mackenzie.

This includes a 30% interest in 19 oil mining leases.

SPDC’s operations are focused on the Niger Delta and adjacent shallow-water areas, and includes more than 1,000 producing wells. These are responsible for 39% of Nigeria’s production, the company claims.

Gail Anderson, research director with Wood Mackenzie’s Sub-Sahara Africa upstream team, said: “There is considerable value upside across the joint venture assets, which bidders will need to carefully evaluate and quantify.”

However, the consultant considers only 20% of the joint venture resources to be commercial at present due to a lack of investment, crude thefts, insecurity, and gas market constraints.

Anderson said: “As a result, our current valuation of Shell’s 30% in the joint venture – which does not include the export pipelines and terminals – is $2.3 billion [at a long-term oil price of $50].

“But this is based on the current sub-optimal, business-as-usual investment profile under existing fiscal terms.

“A competent buyer/operator, giving priority to the assets, could commercialize much more than 20% of the resource base.”

Anderson added: “The recently passed Petroleum Industry Bill, which has still to be signed into law, will offer materially lower royalties and taxes for oil.”

08/12/2021

Courtesy VAALCO's "36TH ANNUAL ROTH CONFERENCE" presentation, March 2024
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