Heirs Holdings Limited and Transnational Corporation of Nigeria Plc (Transcorp) affiliate, Trans-Niger Oil & Gas Limited (TNOG) has acquired Shell Petroleum Development Company (SPDC) stake in the disputed Nigeria’s oil mining lease (OML17) in Ogoniland.
Heirs Holdings and Transcorp have United Bank for Africa (UBA) Chairman, Tony Elumelu as their Chairman and Chief Executive.
TNOG focuses on upstream oil and gas exploration and production as well as provision of allied services in the midstream, downstream, and gas-to-power sectors of the petroleum industry.
SPDC, which announced the completion of the deal on Friday, said the Nigerian oil firm paid about $533million for 30 percent of its interest in the oil concession located in the Eastern Niger Delta, along with associated oil gas infrastructure.
To seal the deal, the SPDC said TNOG made the initial payment of about $453million, with the balance to be completed in line with the share purchase agreement over the course of an agreed period.
SPDC is the operator of the joint venture in which the Nigerian National Petroleum Corporation (NNPC) controls 55 percent equity, Shell, 30 percent, along with Total E&P Nigeria Limited (10%) and Nigerian Agip Oil Company Limited (5%).
Prior to the latest acquisition, which has already been approved by the Department of Petroleum Resources (DPR) and other relevant government agencies, TNOG also acquired the stakes of the other partners in the mining lease, including Total E&P Nigeria and Nigerian Agip Oil Company (NAOC).
Consequently, TNOG now controls 45 percent equity in the new joint venture with the NNPC.
The oil concession, which straddles 15 oil fields, has six currently producing.
Shell commits to long-term development of lease
In a statement, the SPDC said it was “committed to transfer OML 17 in an orderly and responsible manner to the new owner, which will help to provide a sustainable long-term plan to unlock its full potential.”
The SPDC said the sale of the asset would allow it focus on other areas of its business to support the Nigerian Government realize its national energy agenda in its remaining oil mining leases through oil and gas production, payment of royalties, taxes and levies as well as advancing local content and providing social investments.
“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,” Managing Director of SPDC and Country Chairman of Shell Companies in Nigeria, Osagie Okunbor, said.
Shell’s Hard decision
The decision by Shell to sell off the asset in Ogoniland was a hard one.
It came on the back of a long and bitter crisis between it and its communities hosting the operations of the oil asset in Ejama-Ebubu community in Tai Eleme Local Government Area of Ogoniland in Rivers State.
The crisis, which also affected the neighbouring OML 11, began with a legal dispute at the Federal High Court in Port Harcourt in 2001 over a massive spill of over two million barrels of crude oil between 1969 and 1970, which representatives of the Ejama-Ebubu community alleged involved Shell’s oil installations and facilities in Ebubu-Eleme areal.
The spill, the community alleged, flooded the Ochani stream and devastated the soil, rendering the surface and groundwater of their community unfit for human consumption.
The community said despite several protests, Shell failed to clear up the spill and remediate the environment.
On June 14, 2010, the court awarded the community N15.41 billion for damages to compensate for the loss they said they suffered as a result of the pollution.
Following the ruling of the Federal High Court in 2010, the community immediately claimed ownership of the oil asset.
But, Shell filed an appeal to object to the court’s ruling, arguing that the spill was a third party incident as it occurred during the civil war.
The legal battle continued in both the appeal court and Supreme Court.
Meanwhile, all attempts by Shell to access the area and continue with its operations were frustrated by the community.
On September 30, 2019, the matter took a new twist, with the Rivers State Governor, Nyesom Wike, announcing his government’s decision to “fully acquire” Shell’s interest in the disputed oil mining lease in Ogoniland.
Mr. Wike said the state government had submitted a bid of $150 million to the federal government for 45 percent equity in the asset reputed to hold about 250,000 barrels per day (BPD) of oil potential.
The dispute has continued, with the court issuing an injunction on January 14, 2021 to restrain the Ejama-Ebubu community from enforcing the judgment of the High Court on the matter.
It is not clear if the community will rest the matter now that Shell is out of way and a new indigenous operator has taken over the license.