Shell to sell two oil blocks, in talks with Elumelu

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As part of its ongoing divestment, Shell  has reportedly initiated negotiations with local oil producers for selling two of its Nigerian oil licences in the Niger Delta, collectively worth $2 billion.

However, Today’s Echo has gathered that  Shell is already in talks with business Tycoon and former CEO of the United Bank for Africa, Tony Elumelu on the deal.

According to a July 21, 2018 report on Bloomberg, the Anglo-Dutch oil major is discussing selling Oil Mining Licenses (OML) 11 and 17 to Heirs Holdings Ltd., a company run by Nigerian tycoon Tony Elumelu, the people said.

Included in the sale are infrastructure assets such as a natural gas-fired power plant that would be managed by Transnational Corporation of Nigeria Plc, another company run by Elumelu.

Recall that due to the secrecy with which Shell has gone about this deal, Today’s Echo had on July 24, 2018,  published a report asking if Shell’s Opaque Asset Divestment is  Another Malabu in the Making?

The SPDC is known to have sold a couple of prized assets in the Niger Delta in the last decade as it moves to divest its operations and move offshore. Besides Shell, other IOCs like ConocoPhilips, Agip, Total, and BG have sold assets that have been purchased by local companies leading to the rise of indigenous Exploration and Production giants like Aiteo, Eroton, Newcross, Oando, Seplat, etc. “The bidding process alone has allowed these companies to develop significant technical competences and operational maturity”, a source with the Ministry of Petroleum Resources of Nigeria says.

It is however, puzzling to curious observers that Shell has not subjected this particular transaction to the open competitive bidding like their previous asset disposal. This is worrisome to industry players and experts because part of a competitive bid is major technical assessments. Emphasizing on the importance of technical adeptness of a company buying such important national asset, a senior staff of NNPC who prefers anonymity explained: “a competitive bidding round has always been our approved mode of divestment as it is not just about the commerciality. The public is often carried away by only the figures, but the technical bid is even far more important as the ability to sustain the asset is predicated on the technical competence of the bidder. As it stands, only Shell is about to win here as it will pocket the $2 billion and walk away clean from an asset that has only months to expire, leaving Nigeria to grapple with whether the asset is subsequently viable or not.”

Although Tony Elumelu is a seasoned business man and reputable entrepreneur, he is also the chairman of Transnational Corporation of Nigeria Plc (Transcorp), a diversified conglomerate that purchased some Federal Government assets under controversial circumstances during the regime of President Olusegun Obasanjo.

Bloomberg reports indicate that “discussions between Shell and Elumelu have been advanced at times and run into hurdles at others as he is yet to secure financing, the people said. No deal has been reached and the talks could still fall apart.”

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