A Nigerian oil firm, Vertex Energy, last week made Shell an offer it could not refuse for the acquisition of swamp Block OML 40, effectively removing the license from a list of four currently under auction in the oil major’s second divestment programme.
Vertex Energy, founded by about a dozen retired Nigerian oil executives, is financed by a host of leading financial institutions including FirstBank, African Finance Corporation (AFC), Leadway Insurance as well as African Capital Alliance, Nigeria’s top private equity firm.
Industry sources say the financiers have agreed to put down financing for the purchase of the Shell Block OML 40, while FirstBank is also providing additional funding for the operations of the firm thereafter.
“It is a truly indigenous company and funds for its operations are from Nigeria. This is a local content compliant initiative,” one industry source told BusinessDay.
OMLs 30, 34, 40 and 42 - all in Delta State, were offered by Shell in one of the most volatile areas of Nigerian’s oil patch, attracting 18 consortia, comprising Nigerian and international companies.
OML 40 was one of the least prospective and it is understood a bid of more than $120 million swung the deal by Vertex which now seeks to follow the success of similar initiatives by First Hydrocarbon and SEPLAT.
According to a report by Upstream magazine, an initial “clarification meeting” in London revealed Niger Delta Petroleum’s $600million bid for OML 34 easily outshone the $290 million bid by the Seven Energy and Petrofac consortium and, barring technical considerations, will likely clinch it for the independent; which represents a clutch of oil patch states.
India’s Essar Group, in league with Nigerian-owned Energy Equity Resources, remains the front-runner for OML 42 at $400 million, ahead of the Oando Group’s $300 million.
Attracting most interest on account of estimated peak oil production capacity of 50,000 barrels per day, OML 30 attracted an $800 miillion bid from Essar; $755 million from Afren; $750 million from PanOcean; $650 million from Conoil; $600 million from Camac; $522 million from local independent EMO E&P; $515 million from African Petroleum (Forie Oil) and $450 million from Oando.
Also invited alongside companies to negotiate and pay10% of their bid price into an escrow account were Nigerian outfits Neconde Energy; including local construction contractor Nestoil and Shoreline Energy, both of which have paid their deposits.
A bids qualification round has been scheduled for later this week in which suitors would have an opportunity to tweak their bids and convince Shell of their financial capacity and corporate social responsibility commitment before formal sales and purchase awards expected at the weekend.
Shell is understood to be compiling an alternative list of outfits that may be invited to step in if preferred bidders fail to negotiate the final hurdle.
The deals represent the latest in a series of Niger Delta farm-outs in which operator Shell and partners Total and Agip are selling a combined equity of 45% in sensitive swamp and creekside acreage.
Last year, international players sold off equity in OMLs 4, 38 and 41 to the Seplat consortium comprising Nigerian independents Platform Petroleum, Shebah Petroleum Development and French explorer Maurel & Prom ; with financial involvement also from Seven Energy and partner Petrofac.
With additional material from Upstream magazine
