Shell is about to end almost a hundred years of operations in Nigeria’s onshore oil and gas sector after reaching an agreement to sell its subsidiary in the country to a consortium made up mainly of local companies.
The transaction reaches a maximum value of 2.4 billion dollars. The British energy giant’s pioneering presence in the oil and gas business in Nigeria dates back to the 1930s. Over the years, the company has faced numerous onshore oil spills due to theft, sabotage and operational problems, resulting in costly repairs and high-profile lawsuits.
Shell and the sale of the onshore business in Nigeria
Since 2021, Shell has sought to sell its Nigerian oil and gas business, but will continue to operate in Nigeria’s offshore sector, which is more lucrative and less challenging. Shell’s withdrawal is part of a broader trend of Western energy companies withdrawing from Nigeria to focus on newer, more profitable operations.
Other companies such as Exxon Mobil, the Italian Eni and the Norwegian Equinor have also reached agreements to sell assets in the country in recent years.
The British company will sell Shell Petroleum Development Company of Nigeria Limited (SPDC) for an amount of 1.3 billion dollars , as reported in a statement and the buyers will make an additional payment of up to 1.1 billion dollars for previous collection rights.
“This agreement marks a significant milestone for Shell in Nigeria, in line with our previously announced intention to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investments in Nigeria on our deepwater positions. and gas integrated“said Zoë Yujnovich, Shell’s upstream manager.
The purchasing consortium, known as Renaissance, is made up of ND Western, Aradel Energy, First E&P, Waltersmith, all local companies dedicated to oil exploration and production, as well as Petrolin, a Swiss company specialized in trade and investment. The transaction, which has been confirmed by Renaissance, is subject to approval by the Nigerian government.
Damage caused by Shell
Renaissance will take responsibility for addressing spills, theft and sabotage, Shell said. The company, which has faced various claims for compensation for damage caused by spills in the Niger Delta in recent years, says Renaissance will take control of these issues. In this regard, Nnimmo Bassey, Executive Director of the Nigerian organization Health of Mother Earth Foundation, said that ” Shell must assume its responsibility .”
“This means full payment for the repair and restoration of contaminated areas, as well as reparations to the host communities. They cannot avoid the practically irreparable damage they have caused“Bassey said in a statement.
Shell owns and operates SPDC Limited, a company that has a 30% interest in the SPDC joint venture, responsible for 18 onshore and shallow water mining concessions. As of the end of 2022, Shell’s resources in SPDC reached approximately 458 million barrels of oil equivalent.
The joint venture has other partners, including the state-owned Nigerian National Petroleum Corporation (NNPC) with 55%, TotalEnergies with 10% and Italy’s Eni with 5%. In addition to its activities and interests in offshore fields, Shell maintains a liquefied natural gas plant and other assets in Nigeria. SPDC, which remains the operator, was established in 1979, incorporating assets from the former Shell-BP consortium, with its current partners joining in at later stages.
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Source: worldenergytrade.com
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