Wood Mackenzie (WoodMac), a Verisk business, has said that it considers only 20 per cent of the joint venture resources held by Shell Petroleum Development Company (SPDC) in Nigeria to be currently commercial. Wood Mackenzie said this in a press release.
It said that the estimate was based on the lack of investment in the sector, crude theft, insecurity and gas market constraints. Last week, news broke that Royal Dutch Shell launched a major divestment of its Nigerian assets after acquiring sale documents with Expression of Interests (EOIs) that were due by September 10. The reason for this development is tied to the fact that the company’s investment in Environmental, Social and Governance (ESG) no longer rhymed with its activities in the Niger Delta as well as pressure from investors.
Research Director with Wood Mackenzie’s Sub-Sahara Africa upstream team, Gail Anderson, said, “There is considerable value upside across the joint venture assets, which bidders will need to carefully evaluate and quantify. Anderson said that the yet-to-be signed Petroleum Industry Bill (PIB) was going to lower royalties and taxes. She said, “As a result, our current valuation of Shell’s 30 per cent in the joint venture – which does not include the export pipelines and terminals – is $2.3 billion, (NPV10, Jan 2021, $50 long-term oil price). “But this is based on the current suboptimal, 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.” In June, the Managing Director of Shell Nigeria Exploration and Production, Bayo Ojulari, said that if care was not taken, the PIB might be obsolete before it was passed into law due to the transition ongoing in the Oil and Gas sector globally.
Pingback: cvv websites