Heirs Holdings $1.1 billion Oil Mining License (OML) 17 acquisition deal from the Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and ENI will benefit the Federal Government, investors and the multinationals, Managing Director, Financial Derivatives Company of Nigeria, Bismarck Rewane has said.
Rewane, a renowned economist, said the deal struck through TNOG Oil and Gas Limited, a related company of Heirs Holdings and Transcorp, showed ongoing assets optimization by the multinationals.
On why such valuable assets would be sold by the multinationals, Rewane said the multinationals are focusing on offshore and deepwater oil fields with higher returns and Laos giving Nigerian investors opportunity to retain profits in the country.
Continuing, he said aside the gain of economic patriotism, the oil deal will help to create jobs, transfer of technology and management skills to locals.
On security, Rewane said that issues around securing the assets will be better handled by Nigerian companies.
He said: “Actually, this is optimization of assets by the multinationals. There are three types of assets in Nigeria. The land and swamp oil fields; offshore and deepwater oil fields. In the offshore and deepwater, what accrues to the multinationals is much higher than what obtains in the land and swamp oil fields.”
“Besides, the land and swamp oil field is also full of risks, because of restlessness and activities of militants in the region. So, what has happened is that there is rationalization of assets because of prices dropping and also meeting the other objective of getting local content”.
Rewane said that Heirs Holdings, Tony Elumelu Foundation and Transcorp are very reputable Nigerian investors, which have the resources and have paid the total amount of $1.1 billion for the deal, which he described as a good move both for the government, investors and multinationals.
He disclosed that everywhere across the world, host communities are trying to have a spin in the game, rather than having a situation whereby the multinationals come in and get the revenues out.
“That is the gain of economic patriotism on one hand, and it helps to create jobs, transfer of technology and management skills. That is why you select the type of Nigerian partners you want, those that have capacity, and Heirs Holdings has shown that they have a track record of success,” he stated.
On security, Rewane said that issues around securing the assets will be better handled by Nigerian companies. “Heirs Holdings belong to people who are from the Niger Delta themselves. So, you have what is called the ‘son of the soil credentials’ which help you to negotiate better. But not all the time . In any case, they also some risk insurance which will help you,” he said.
Other analysts said 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.
Heirs Holdings’ heritage and approach to business fundamentally underscores its commitment to inclusive development and shared prosperity with its host communities. Heirs Holdings is fully invested in the development of the Niger Delta region.
Heirs Holdings’ strategy of creating the leading integrated energy business in Africa is executed through a series of strategic portfolio holdings. Transcorp is one of the largest power producers in Nigeria, with 2,000 MW of installed capacity, through ownership of Transcorp Power Plant and the recent acquisition of Afam Power Plc and Afam Three Fast Power Limited.
Transcorp closed the $300 million Afam acquisitions in November 2020. Transcorp supplies electricity to the Republic of Benin, as part of an emphasis on promoting regional integration and delivering robust power supply to catalyse development in Africa. Transcorp also operates OPL281, under a production sharing contract with the Nigerian National Petroleum Corporation (NNPC).
Similarly, Heirs Holdings’ subsidiary, Tenoil is the operator of OPL 2008, under a production sharing contract with NNPC. Tenoil also owns the Ata Marginal Field, which will commence production in second quarter of 2021, with 3,500 barrels of oil per day.
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