Shell has launched moves to sell off its Nigerian oilfields, as well as a key pipeline, the 60-mile Nembe Creek Trunk Line, co-owned by Shell, Total and Eni for about $5bn to domestic buyers. The choice of the local buyers was because no foreign company has recently shown interest in investing in Nigeria’s oil industry. In spite of that, the dealing shows indigenous oil operators have garnered so much financial muscle to invest and run the industry. Shell is definitely aware of this, and has hiked price for the oilfields and pipeline from what it initially was last year. Industry watchers have expressed the opinion that another $10bn of assets from international companies may be sold off to local operators in the next few years.
The sale, understandably, is part of a sustained move by the oil and gas majors to divest their investment in the country’s troubled onshore oil sector due to constant theft, pipeline vandalism and delay in the passage of the Petroleum Industry Bill, PIB, which expectedly will set new guidelines for oil and gas operations.
Taleveras and Aiteo, two local operators involved in the up and down streams oil sector, have offered $2.6bn for the Oil Mining Licence 29, which is reputed to be the far largest among what will be sold. Another local operator, Pan Ocean Oil Corporation, was said to have been selected for Oil Mining Licence 24 for $900m, while Eroton, a consortium of Midwest Oil and Gas and Mart Resources, has won OML 18 for about $1.2bn. Crestar won the bid for OML 25, which is selling for $500m. the deals are expected to be consummated in few weeks.
Unlike the traditional practices, where foreign banks finance oilfields purchases, loans for the current deals are sought by local banks.