Shell in Talks with Tony Elumelu to Sell $2 Billion Nigeria Oil Assets
The Anglo-Dutch oil major is discussing selling oil mining licenses 11 and 17 to Heirs Holdings Ltd., a company run by Nigerian tycoon Tony Elumelu. 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.
Exiting the two blocks would cut Shell’s exposure in a region of Nigeria rife with controversy. The company has sold billions of dollars of Niger Delta assets in the past decade amid local opposition, civil conflict, militant attacks and accusations of causing pollution. The latest sale would leave Shell to focus on its operations in Nigerian waters, where the risks of attacks on infrastructure and theft are relatively low.
Our source reported 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.
Shell discovered oil in the Niger Delta in the 1950s and became among the biggest producers in the West African nation. Tensions between the company and the local people broke out over the years regarding pollution and Shell’s contribution to civil society. The growing crisis shot to world attention when in 1995 a prominent protester and Shell critic Ken Saro-Wiwa, a member of the Ogoni ethnic minority, was executed by the Nigerian government along with eight others.
Shell’s Niger Delta operations have faced outside scrutiny. In 2011, a 260-page report by the United Nations Environment Programme said the company hadn’t applied its own procedures when operating in the delta and that environmental destruction was worse than previously thought, creating a “tragic legacy.”
Shell has continued to face opposition in the region, with some reports suggesting local people even blocked the company from accessing some parts of the delta for years. This has left Shell with undeveloped oil and gas reserves. The company declined to say how much resources OML 11 and 17 hold.
Shell’s share of total production in Nigeria was 266,000 barrels of oil equivalent a day last year compared with 258,000 barrels in 2016, according to its annual report. “Security issues, sabotage and crude oil theft in the Niger Delta continued to be significant challenges in 2017,” it said in the report.
The OML 11 license is smaller than what it once was. The Nigerian government split the block into three parts in April, giving Shell one portion, after the oil major sought to renew its production license there.