Shell has started a process to divest all of its operated joint venture licences held by the Shell Petroleum Development Company (SPDC) in Nigeria, and those assets are valued at $2.3 billion by Wood Mackenzie.
This includes a 30% interest in 19 Oil Mining Leases (OMLs).
Gail Anderson, Research Director with Wood Mackenzie’s Sub-Sahara Africa upstream team, said: “There is considerable value upside across the joint venture assets, which bidders will need to carefully evaluate and quantify.”
Wood Mackenzie, a Verisk business (Nasdaq: VRSK) considers only 20% of the joint venture resources to be currently commercial due to a lack of investment, crude theft, insecurity and gas market constraints.
Anderson said: “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$2.3 billion, (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.”