Shell has initiated a process to divest all of its operated joint venture licences held by the Shell Petroleum Development Company (SPDC) in Nigeria, including a 30% interest in 19 oil mining leases (OMLs)
Gail Anderson, research director with Wood Mackenzie’s sub-Saharan Africa upstream team, said, “There is considerable value upside across the joint venture assets, which bidders will need to carefully evaluate and quantify.”
Anderson added, “As a result, our current valuation of Shell's 30% in the joint venture - which does not include the export pipelines and terminals - is US$2.3bn, (NPV10, Jan 2021, US$50 long-term oil price).
“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 commercialise much more than 20% of the resource base. However, the availability of funding for the joint venture partners will, as ever, dictate how much.”
She added, “Importantly, the recently passed Petroleum Industry Bill (PIB), which has still to be signed into law, will offer materially lower royalties and taxes for oil.”
