Shell Plc has agreed to divest its onshore oil assets in Nigeria to a local consortium for a sum exceeding $1.3 billion, subject to government approval.
Zoe Yujnovich, Shell’s Integrated Gas and Upstream Director, confirmed the transaction in a statement on Tuesday, underscoring the significance of the deal. Yujnovich emphasized the company’s commitment to streamlining its portfolio and strategically directing investments towards deepwater and integrated gas ventures in Nigeria.
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Key points to note:
- In 2021, Shell announced its intention to divest its onshore assets in Nigeria due to operational challenges, including theft and oil spills, which were incompatible with its long-term energy transition strategy.
- Former CEO Ben van Beurden highlighted a surge in sabotage leading to near-lawlessness beyond the company’s control. Local producers like ND Western, Heirs Oil and Gas Ltd., Seplat Energy Plc, and Sahara Group Ltd. expressed interest in acquiring the stake.
- The divestment process experienced a pause in 2022, but Shell resumed talks in June 2023 to sell its 30% interest in the joint venture known as SPDC, operating onshore and in shallow-water oil and gas fields. This venture included Eni SpA, TotalEnergies SE, and the Nigerian National Petroleum Co. Ltd. The pause was prompted by a lawsuit at Nigeria’s Supreme Court, with a lower court instructing Shell not to sell assets before resolving a dispute with a Niger Delta community over alleged pollution.
- President Bola Tinubu’s administration, which began in May, prompted advisers to recommend the closure of outstanding divestments sought by international oil producers to boost petroleum output. This aligns with the government’s strategy to address challenges in the oil sector and stimulate increased production.
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This strategic move aligns with Shell’s objective to exit the demanding operating environment in the Niger Delta region. In addition to the initial transaction amount, Shell anticipates potential additional payments of up to $1.1 billion. The consortium set to acquire the assets, named Renaissance, includes ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.