Tony Elumelu’s Heirs Oil, 3 Other Firms Bid For Shell JVC Stake

Shell Plc’s sale of a multibillion dollar stake in a joint venture that operates oil fields in Nigeria has attracted bids from four local companies.

The sale is ramping up at a time when Shell has just announced a significant delay in the development of its crucial Bonga asset in deep offshore Nigeria.

Sources said Seplat Energy Plc, Sahara Group Ltd., Heirs Oil and Gas Ltd. and ND Western Ltd. submitted the non-binding offers in January.

Shell’s 30% operating interest could fetch as much as $4 billion, according to sources.

Another source said Shell has yet to disclose to buyers the scale of potential future costs related to litigation or decommissioning and abandoning oil wells, which could bring down the sale price significantly.

In August, energy consultant Wood Mackenzie Ltd. valued the stake at $2.3 billion, assuming a long-term oil price of $50 a barrel.

Brent crude, the international benchmark, is currently trading near $92.

Shell is looking to complete an exit process started in Nigeria more than a decade ago, by selling its remaining onshore and shallow-water assets.

The London-based oil major has been pumping crude in the West African country since shortly before it secured independence in 1960.

That lengthy association has resulted in an accumulation of accusations, lawsuits and reputational damage as numerous local communities have been afflicted by oil spills and other forms of pollution.

Investors are also keen for Shell to transition to cleaner forms of energy.

Even after a sale of the assets, Shell would retain a significant presence in Africa’s biggest crude producer as the owner of export terminals and deep-water projects.

Shell is currently evaluating the non-binding bids to see which parties to take to the next round, a source added.

While deliberations are ongoing, no final agreements have been reached and Shell could also decide to retain the asset, the source said.