Offshore staff
LONDON – Shell 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
