A Review of the Nigerian Energy Industry

Shell’s assets sale may take a year – CFO

01 May 2014, Lagos – ShellOil major, Shell may take up to a year to complete a planned sale of assets in Nigeria, and the process may be complicated by an election, the oil major’s Chief Financial Officer, CFO, said.

Shell is looking to make $15 billion in disposals worldwide this year and next, including the sale of its stake in four oil blocks in the Niger Delta, an area that holds a large share of Nigeria’s 37 billion barrels of oil reserves.

“We can come to a good commercial agreement,” CFO Simon Henry said in a conference call with investors yesterday.

He said: “What is slightly more challenging and difficult to predict is how we can get the overall approvals across the whole of the stakeholder environment, including the government, because previous transactions had taken up to a year.”

An election planned for February could have an impact on the sale process, he said, without specifying in what way. He said the Nigerian assets have attracted strong interest from potential buyers.

Shell is divesting 30 percent of the four blocks, along with the sale of 10 percent from Total and five percent from Eni. Analysts have estimated the value of the combined 45 percent at around $3 billion.

“We have had over 20 serious bidders mostly in consortium, with a Nigerian operator often with overseas operational financial or operational backing,” Henry said.

In the over 70 years that Shell has operated in Nigeria, it has faced problems in the Niger Delta region with oil theft, environmental damage, political protests and attacks on its facilities.

As part of any deal, the oil major wants to minimise its exposure to further risks there.

Henry said: “Clearly, the terms of the sale aim to establish baselines against which we carry no liability if there are environmental or other issues after the point of sale.

“Whether that can hold up in the future remains to be seen.

“It will always be difficult to detach the Shell name from some of the activities in the Delta.

“We have eyes open on this, but the legal protection will be solid. The reputational liability is impossible to divest.”


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