PE firms eye Shell Nigeria’s onshore assets
28 Oct 2010
A consortium of private equity heavyweight firms are planning to buy Anglo-Dutch oil company Royal Dutch Shell's Nigerian onshore oil assets in a deal that could be as much as $4 billion.
According to various media reports, a consortium comprising of Blackstone Group, Kohlberg Kravis Roberts & Co and New York-based leveraged buyout firm led Riverstone Management Ltd led by John Browne, the former CEO of BP are planning to buy Shell's 30 per cent stake in its Nigerian onshore oil-production assets holding proven oil reserves of about 100 million barrels, for around $4 billion.
A rival consortium that includes London-based Anglo-French oil and gas company Perenco, Africa focused petroleum and mining company Addax & Oryx Group and Nigeria-based Pan-African multinational energy corporation Oando are reportedly also in the race for Shell's assets.
Following years of militant attacks on its facilities, Shell, Europe's largest oil company had said in December 2009 that it is seeking buyers for its Nigerian onshore oil assets, which is expected to have a market value of $4-5 billion. (See: Shell to divest Nigerian assets worth $5-billion)
Shell's stake are held by its Nigerian subsidiary, Shell Petroleum Development Co, which is the operator of a joint venture where state-owned NNPC holds a 55 per cent stake, Shell 30 per cent, Total 10 per cent and Eni SpA 5 per cent.
Shell's partners have a right of first refusal, but all of them have indirectly indicated that they will not exercise their right. The sale however would require the approval of NNPC and the bidder will have to have a local partner to meet local government's requirements.
Although Shell's assets are worth in the region of nearly $5 billion, analysts say that the assets will not fetch its real worth since all these onshore oil assets have been target of militant attacks over the past four years, and Shell has lost hundreds of millions of dollars in profit since 2006. (See: Nigerian militants target Chevron, Shell oil installations; capture ship)