Trading houses move to buy off Nigeria oil majors’ assets

Commodity trading houses Glencore and Mercuria are among the shortlisted consortiums expected to make final bids on Nigerian energy assets worth around $3 billion that three oil majors are selling, sources close to the process say. Trading houses have been marketing Nigeria’s crude oil and importing fuel there for decades. New upstream acquisitions would help cement their relationship with Nigeria, a key supplier to Europe and India.

Shell is selling its 30 per cent stake in four oil blocks, with Total and Eni also set to profit from their 10 per cent and 5 per cent shares. The Nigerian National Petroleum Corporation (NNPC) owns the remaining 55 per cent. Shell is also selling the 97-km (60-mile) Nembe Creek oil pipeline, which has been regularly attacked by oil thieves.

Final bids for the stakes in the blocks are due on February 18, the sources said.

Shell has already made $1.8 billion from asset sales in Nigeria since 2010 as several oil majors choose to cash in on onshore fields in the Niger Delta, where divestment is increasingly popular due to oil theft and a government drive to increase local ownership.

Oil majors are still keen to keep the largest and most profitable Niger Delta fields and infrastructure, and want to expand in Nigeria’s deep offshore areas.

There is high demand for assets in the Niger Delta, which holds a large portion of Nigeria’s 37 billion barrels of oil reserves. The oil is high-quality, relatively easy to drill, and some Nigerian companies have said they can better handle the security challenges faced by oil majors. Shell has kept the specifics of the assets it is selling secret, but information from a confidential company document and from sources involved in the process reveals new details.