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The company will then ask interested parties to and would need significant lender support,” the
submit non-binding offers in the second phase, source said. Under these circumstances, selling
they added. SPDC to “an international private group with
As of press time, Shell had not confirmed operating expertise – for example, Perenco or a
This Day’s report. When contacted by the Chinese player – might make [the] most sense,”
Nigerian newspaper, a company spokesman he remarked.
acknowledged that Shell was discussing the fate It might also make sense to look for a Nige-
of its onshore Nigerian projects with Abuja. He rian investor with roots in the Niger River
also stressed, though, that these talks were pre- Delta, where most of SPDC’s assets are located,
liminary in nature. given that Shell has often drawn criticism for its
“Discussions with the Nigerian government involvement in the oil spills and political repres-
are ongoing on the next steps for our onshore sion that have blighted the region. Presumably
business in Nigeria,” he told This Day. “We are such an investor might be more sensitive to the
in the early stages of reviewing the commercial challenges facing host communities. It remains
options.” to be seen, though, whether such hopes can be Shell might be
realised. willing to split
Climate concerns
One of This Day’s sources stated that climate New divestment rules SPDC’s holdings
concerns were among the factors that had led the The second source was speaking shortly before
Anglo-Dutch giant to opt for divesting SPDC. Mele Kyari, the group managing director of among multiple
“Shell is selling the business because it no NNPC, said that his company was developing
longer views its activities in the Niger Delta as strict criteria to govern the divestment of Nige- buyers
core to its ongoing strategy, which is driven by rian assets by IOCs.
the pressure from its investors, as confirmed by Speaking at the opening session of an
its CEO earlier this year,” he said. “Also, several of industry conference in Lagos, Kyari remarked
the Oil Mining Leases (OMLs) have upcoming that NNPC could not prevent foreign compa-
development costs, which Shell does not intend nies from unloading Nigerian fields. He also
to fund.” declared, though, that the company had learned
Plans for the sale are not expected to affect from past experience that it should not allow
Shell’s portfolio of deepwater Nigerian assets, investors to depart without resolving certain
the source added. “The [deepwater] business issues to NNPC’s satisfaction.
will be worth several billions of dollars, and The issues in question, he said, include mak-
Shell will want full-value offers for the deal but ing provisions to cover third-party liabilities,
is strategically driven in this disposal and will severance payments to staff and abandonment
likely prefer low-execution risk to waiting for a and relinquishment costs. Additionally, he said,
knockout offer,” he commented. NNPC expects sellers to take the steps necessary
to check that buyers have the technical, opera-
Nigerian interests tional and financial capability to assume respon-
Meanwhile, another source speculated as to how sibility for the assets in question, especially now
the divestment might proceed. that foreign lenders are less keen on investing in
He told This Day that Shell might be willing fossil fuel projects.
to split SPDC’s holdings among multiple inves- As such, the state-run company intends to
tors rather than selling it all to a single buyer. draw up clear policies and criteria governing
The company’s portfolio includes onshore fields, the process of divestment from joint ventures
shallow-water offshore fields and infrastructure, and production-sharing contracts (PSCs). He
and potential investors are likely to value each did not say when NNPC might finalise the new
type of asset differently, he explained. rules. ™
The second source also said it was “under-
stood” that Abuja would favour proposals for
selling Shell’s stake in the joint venture to com-
panies or groups that are at least partially Nige-
rian-owned. Since SPDC “is very likely too large
for any single acquirer ... Shell may sell portions
of equity in the whole of SPDC to different con-
sortia of buyers,” he commented. “But either
way, buyers will need to have a local Nigerian
element.”
The Nigerian government is considering
several different options, he claimed. Officials in
Abuja understand that large publicly listed inter-
national oil companies (IOCs) may be reluctant
to make an offer for SPDC, owing to the risk
associated with Nigeria and the difficulty of rais-
ing funds for such a deal now that many lenders
are limiting their exposure to fossil fuels.
“Local sponsors may be interested, but this
would constitute a very transformational deal (File Photo)

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