Elumelu’s mega investment boosts oil and gas industry

BY EMEKA EJERE

Heirs Holdings on Friday took a bold step towards its vision of creating Africa’s first integrated energy multinational, expanding its oil and gas portfolio, with an unconditional acquisition of 45% of OML 17 from Shell Nigeria.
The acquisition was made through TNOG Oil and Gas Limited, a related company of Heirs Holdings and Transnational Corporation of Nigeria Plc (Transcorp), both of which are chaired by Mr. Tony Elumelu, who is also the chairman of United Bank for Africa Plc. (UBA).
The transaction reputed as one of the largest oil and gas financing in Africa in more than a decade, also includes acquisition of all assets of the previous owners — Shell Petroleum Development Company of Nigeria Ltd (SPDC) (30 per cent), Total E&P Nigeria Ltd (10 per cent) and ENI (five per cent) — in the lease.
A financing component of $1.1 billion is provided by a consortium of global and regional banks and investors, the new owners said in a statement seen by Business Hallmark.
The statement read in part: “With a financing component of US$1.1 billion, provided by a consortium of global and regional banks and investors. OML 17 has a current production capacity of 27,000 barrels of oil equivalent per day and according to our estimates, 2P reserves of 1.2 billion barrels of oil equivalent, with an additional 1 billion barrels of oil equivalent resources of further exploration potential.
“The investment demonstrates a further important advance in the execution of Heirs Holdings’ integrated energy strategy and the Group’s commitment to Africa’s development, through long term investments that create economic prosperity and social wealth.”
The oil field currently has a production capacity of 27,000 barrels of oil equivalent per day. There are estimated 2P reserves (proven and probable) of 1.2 billion barrels and an additional one billion barrels in possible reserves — all of oil equivalent.

In his remarks Elumelu: “We have a very clear vision: creating Africa’s first integrated energy multinational, a global quality business, uniquely focused on Africa and Africa’s energy needs. The acquisition of such a high-quality asset, with significant potential for further growth, is a strong statement of our confidence in Nigeria, the Nigerian oil and gas sector and a tribute to the extremely high-quality management team that we have assembled.
“As a Nigerian, and more particularly an indigene of the Niger Delta region, I understand well our responsibilities that come with stewardship of the asset, our engagement with communities and the strategic importance of the oil and gas sector in Nigeria. We see significant benefits from integrating our production, with our ability to power Nigeria, through Transcorp, and deliver value across the energy value chain.
“I would like to thank Shell, Total and ENI, for the professionalism of the process, the Federal Government of Nigeria, the Ministry of Petroleum Resources, and the NNPC for the confidence they have placed in us.”
The President and Group Chief Executive Officer, Transcorp, Owen Omogiafo, explained that the “deal further demonstrates Transcorp’s integrated energy strategy and our determination to power Africa.”
Managing Director of SPDC and country chairman of Shell Companies in Nigeria, Osagie Okunbor, said: “As with previous divestments, we will facilitate a successful transition to new ownership. Shell has been in Nigeria for over 60 years and remains committed to a long-term presence here.”
Indications that Elumelu’s Heir may acquire Shell started emerging two years ago, when reports had it that the Royal Dutch Shell Plc was reportedly considering the possibility of selling its two oil mining licenses in the oil-rich Niger-Delta.
According to reports, Heirs Holding Ltd was already raising funds to acquire the two oil mining licenses 11 and 17 valued at $2 billion. The assets include a natural gas-fired power plant which will be managed by Transnational Corporation of Nigeria Plc.
The decision to sell off these assets, the report said, was informed by the continued unrest in the oil-rich region and age long accusation of environmental pollution levelled against the Dutch oil firm.
Shell has over the years faced stiff opposition in operating within the Niger-Delta region, with several reports of pipeline vandalism and youth restiveness in the region.
These do not look like serious challenges to the new owners of the assets.