The Shell Petroleum
Development Company, SPDC, has refused to name the proposed bidders as
it divests from four of its oil blocks, after a similar exercise last
year.
Precious Okolobo, a
spokesperson of the company, said there is no official comment on the
process. However, some international dailies reported that final bids
should have been conducted mid January, with winners due to be
announced in early March.
In October 2010,
Afren announced the acquisition of the OML26 block in Nigeria from
Shell, with its shares gaining about 14 per cent the same day.
Shell has been
embarking on some divestures since last year, with some oil experts
saying several reasons may have led to this. Dragan Trajkov, an analyst
at Renaissance Capital, an investment bank, says there are several
reasons why Shell might have decided to shift its operations towards
deep offshore and divest some of the onshore assets.
“Deep offshore
assets tend to be much larger size than onshore. In order to make a
meaningful impact on the company’s production for a company the size of
Shell, you really need significant discoveries. This contrast with the
current legacy onshore assets that the company is divesting,” Mr.
Trajkov said.
He added that it is
no secret that Shell has had a very difficult time to establish a
healthy working relationship with the local population.
“Most of the assets
that it is trying to divest are either shut-in or produce at restricted
rates. They are less likely to have these types of issues in deep
offshore assets. We do believe that the potential Petroleum Industry
Bill and the already passed Local Content Bill might have had some
impact on their decision, especially the fact that the early version of
the PIB was proposing that the majors may be required to relinquish
some of the undeveloped fields.
“However, we don’t
think this was the major determining factor, but rather a combination
of all these three things together,” he further said.
Last January, Shell
sold Nigeria assets to a consortium led by local companies. In a
statement issued then, Shell stated that it agreed to transfer its
interest in three production licences and related equipment in the
Niger Delta to a consortium led by two Nigerian companies.
What’s for sale?
A Renaissance
Capital report says, “although not publicly announced, several media
outlets have reported that in this round Shell is looking to divest its
30 per cent interest in the following Nigerian blocks: OML30, OML34,
OML40 and OML42.”
It is believed that
the actual potential will be a lot clearer once the winners are
announced and more detailed technical data are publicly available.
“We see Oando as
the main publicly available candidate that could be a winner in the
bidding process. In our view, its availability on the exchange, its
market cap, political connections, and potential international partners
make the company pretty much the only option for investors seeking to
play the Shell acquisition card,” the report noted.
However, Oando was unavailable for comments as the company did not respond to phone enquires and site visits.
