Shell, a British energy major, on Tuesday, announced that it had reached an agreement to sell its Nigerian onshore subsidiary – Shell Petroleum Development Company of Nigeria Limited, to Renaissance for $2.4bn after about a century of operations in the NIger Delta.
Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group, confirmed the deal.
A statement from Shell stated that the “completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.”
It added that the transaction would preserve SPDC’s operating capabilities for the benefit of the joint venture, adding that it had been designed to preserve the full range of SPDC’s operating capabilities following the change of ownership.
“Following completion, Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG, to help Nigeria achieve maximum value from NLNG.”
Shell said it would focus investment on deepwater and integrated gas positions.
Shell has been active in Nigeria since the 1930s and has struggled for years with hundreds of oil spills at its onshore operations as a result of theft, sabotage and operational issues that led to costly repairs and high-profile lawsuits.
The global firm stated that it had sought to sell its Nigerian oil and gas business since 2021, but noted that it would remain active in Nigeria’s more lucrative and less problematic offshore sector.
“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions,” Shell’s Integrated Gas and Upstream Director, Zoë Yujnovich, stated in the statement from the company.
He added, “It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium.
“Shell sees a bright future in Nigeria with a positive investment outlook for its energy sector. We will continue to support the country’s growing energy needs and export ambitions in areas aligned with our strategy.”
Shell is to sell SPDC for a consideration of $1.3bn, while the buyers would make an additional payment of up to $1.1bn relating to prior receivables at completion, the company stated.
According to the statement, the SPDC JV is an unincorporated joint venture of SPDC Ltd (30 per cent), Nigerian National Petroleum Company Limited (55 per cent), Total Exploration and Production Nigeria Ltd (10 per cent) and Nigeria Agip Oil Company Ltd (five per cent).
The SPDC JV holds 15 oil mining leases for petroleum operations onshore and three for petroleum operations in shallow water in Nigeria. It is operated by SPDC.
The buyer of the asset, Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, all local oil exploration and production companies, and Petrolin, a Swiss-based trading and investment company.
The SPDC JV holds 15 oil mining leases for petroleum operations onshore and three for petroleum operations in shallow water in Nigeria. It is operated by SPDC.
The buyer of the asset, Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, all local oil exploration and production companies, and Petrolin, a Swiss-based trading and investment company.
Renaissance confirms
Renaissance Africa Energy confirmed its plan to acquire SPDC, as it stated in a statement that “we are pleased to announce the signing of a landmark transaction with Shell to acquire its entire shareholding in The Shell Petroleum Development Company of Nigeria Limited.”
It said the “acquisition marks a significant milestone for Renaissance, establishing its strategic position in the Nigerian market.”
It said the consortium was committed to ensuring a smooth transition and look forward to leveraging its expertise.
This, it said, was “in partnership with SPDC’s industry-leading staff and working in partnership with all the stakeholders in the SPDC-JV to drive continued growth and success in Nigeria and beyond.”
It, however, added that the completion of the transaction was subject to the requisite regulatory approvals.
IOCs divestments
Operators in the oil sector have repeatedly expressed concern about the continued divestments of International Oil Companies, as the IOCs move their businesses out of Nigeria due to the continued oil theft in the Niger Delta, among other issues.
Nigeria has five IOCs operating in the country and they include Shell Producing Development Company, TotalEnergies, Chevron, ExxonMobil and Eni.
According to reports, most of the assets targeted for divestment by the IOCs were the onshore properties located mostly in shallow waters on land.
These are mainly the marginal fields which are mostly relatively low in the quantity of crude oil found in them.
A report in the Africa Report, a journal on African politics and business, stated that in the past 11 years the IOCs had divested a total of about 26 Oil Mining Licences in the Niger Delta region with more set to be sold.
In July 2022, the Federal Government described the divestments by international oil companies from the Nigerian oil and gas sector as a threat to the industry.
It, however, challenged indigenous oil producers to see the IOCs’ divestments as an opportunity for Nigerian firms operating in the space to take advantage of the development.
The Chief Executive, Nigerian Upstream Petroleum Regulatory Commission, Gbenga Komolafe, had disclosed this at the Gala Dinner of the Independent Petroleum Producers Group in Abuja, which had the theme, “IOC Divestment – Nigeria’s Energy Security and the Role of IPPG in the New Dawn.”
The IPPG is made of 25 indigenous member oil and gas companies with global reach and capacity in the sector.
“As a regulator, the commission is not oblivious of the threat posed to the development of the Nigerian hydrocarbon industry by the divestment of the IOCs.
“The impetus for divestment by the IOCs is mainly attributable to the hostile upstream petroleum environment arising from the menace of crude oil theft and energy transition as a global response to the advocacy for the reduction in carbon emission.
“Our view as a commission is that the IPPG and other prospective indigenous players should perceive the IOCs’ divestments in some of the upstream assets as an opportunity rather than a threat to the development of the Nigerian upstream petroleum sector,” Komolafe had stated.
AI tackles govt
Commenting on Shell’s sale of its Nigerian onshore oil business, Amnesty International stated that the IOC must not leave behind environmental problems in the Niger Delta where it had made huge earnings in billions of dollars.
Reacting to Shell’s sale of its onshore oil business in Nigeria for up to $2.4bn, Amnesty International’s Head of Business and Human Rights, Mark Dummett, said, “For decades oil spills have damaged the health and livelihoods of many inhabitants of the Niger Delta.
“Shell has earned billions of dollars from this business and it must make sure that its withdrawal does not have negative human rights and environmental consequences. We are calling for effective remedy for people whose rights have long been abused.”
Dummett in an emailed reaction to our correspondent, further noted that “Shell should not be allowed to wash its hands of the problems and leave.
“We urge the Nigerian government to require Shell to provide a full assessment of existing pollution and the current state of its infrastructure. This information needs to be shared with affected communities.
“Nigeria’s government must ensure local inhabitants’ concerns about the sale are fully appraised and addressed, and uphold and protect the human rights of its citizens, including their rights to an adequate standard of living, clean water and health.
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