The Federal Government on Monday commenced a due diligence meeting for the proposed $2.4bn asset sale by Shell to Renaissance Africa Energy, and announced that it targets to complete the divestment exercise by June this year.
Shell, a British energy major, had announced in January that it had reached an agreement to sell its Nigerian onshore subsidiary – Shell Petroleum Development Company of Nigeria Limited, to Renaissance for $2.4bn after about a century of operations in the Niger Delta.
Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group, confirmed the deal.
Shell had stated in a statement that the “completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.”
Renaissance had also confirmed the signing of what it called a landmark transaction with Shell Plc to acquire its entire shareholding in the Shell Petroleum Development Company of Nigeria Limited.
Renaissance is a consortium consisting of ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and the Waltersmith Group.
Parties in the deal and officials from the Nigerian Upstream Petroleum Regulatory Commission commenced a due diligence dialogue in Abuja on Monday, where the Chief Executive, NUPRC, Gbenga Komolafe, told journalists on the sidelines of the event that the target exit period for the process would be in June.
He also revealed that the government had approved the involvement of two globally renowned consultants to work with the NUPRC in concluding the process.
He said, “The target time we expect to exit this exercise is by the end of June.
“On the question about the leading consultants that have been approved to work with the commission in this respect, the first is S&P Global, which is a world leading firm in this exercise that has carried out similar functions in other jurisdictions.
“We also have the BCG Group. They are the two consultants working with commission to ensure that the processes are conducted in line with the best and standard practices.”
In his opening remarks at the workshop, Komolafe described it as crucial, adding that it was “organised to discuss and work together on the proposed divestment of the participating interests held by the Shell Petroleum Development Company of Nigerian Limited in the SPDC JV assets, through a sale by its shareholders of all the issued shares of SPDC to Renaissance Africa Energy Company Limited.”
The SPDC JV assets are currently operated by the SPDC on behalf of its joint venture partners namely NNPC Limited and Total Upstream Nigeria Limited, Nigeria Agip Oil Company and SPDC.
The SPDC JV OMLs were originally awarded as Oil Exploration Licence-1 on January 1, 1949 covering the whole of southern Nigeria and Cameroon. The assets were converted to OMLs on April 1, 1962 and subsequently renewed in 2014 and 2018 for 20 years.
“To date, the assets have achieved a cumulative production of 5.35 billion barrels of crude oil, 165. 57 million barrels of condensate, 9.51 trillion cubic feet of associated gas and 3.75 trillion cubic feet of non-associated gas, contributing immensely to the achievement of Nigeria’s crude and condensate output.
“The assets being considered have an estimated total reserve of 4.96 billion barrels of oil, 1.77 billion barrels of condensate, 28.16 trillion cubic feet of associated gas and 28.11 trillion cubic feet of non-associated gas. This makes a significant contribution to the nation’s hydrocarbon resources.
“Additionally, these assets hold P3 (additional) reserves estimated at 2.85 billion barrels of oil, 850.85 million barrels of condensate, 11.3 trillion cubic feet of associated gas and 12.26 trillion cubic feet of non-associated gas,” Komolafe stated.
He said the goal of NUPRC at the due diligence meeting was to identify a successor who not only possesses the requisite financial resources but also demonstrates the technical expertise to responsibly manage these assets throughout their life cycle.
“Furthermore, we must ensure that the inherent environmental and end-of-life liabilities i.e. decommissioning liabilities, are accurate identified, and assigned to the party best equipped to bear the associated risks.
“This necessitates a comprehensive understanding of regulatory requirements, industry best practices, and the unique challenges inherent in oil and gas operations,” the NUPRC boss stated.
The General Manager, SPDC Assets and Deputy Managing Director, SPDC Ltd, Wessel de Haas, and his team, as well as representatives from Renaissance, welcomed the due diligence meeting of the government and expressed hope that the asset sale would be sorted on schedule.
