London January 17 2024: Shell has agreed to sell its onshore oil production business in Nigeria following a flood of other international groups seeking to withdraw from the country’s restive Niger Delta region.
The 68-year-old Shell Petroleum Development Company of Nigeria will be acquired by a consortium of local and international companies for at least $1.3bn, the UK-listed oil major said on Tuesday.
The departure follows ExxonMobil of the US, Italy’s Eni, Norway’s Equinor and China’s Addax, which have all announced deals to sell onshore assets in Nigeria in the past two years because of overlapping problems of oil theft, violence and environmental damage.
Although Shell is not leaving Nigeria entirely, the planned sale marks an end of an era for the company, which has been at the centre of the country’s oil industry for almost 100 years.
The group said it would continue to invest in Nigeria, focusing on its deepwater oil operations and integrated gas business.
“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,” said Zoë Yujnovich, Shell’s integrated gas and upstream director, in a statement.
The acquiring consortium, known as Renaissance, includes Switzerland-based Petrolin and four Nigerian oil producers, ND Western, Aradel Holdings, First E&P and Waltersmith.
Although some of the consortium have been operating in the Niger Delta for 20 years, the companies have little profile outside of Nigeria.
Shell has been seeking to leave its onshore business in Nigeria for the past three years.
It was forced to halt the process in 2022 after a Nigerian court ordered Shell to pause its divestment plans pending the result of a court case related to compensation for environmental damage in the Niger Delta.
Nigeria’s Supreme Court upheld the company’s appeal against this ruling earlier this month, allowing the sales process to resume.
However, the sale to Renaissance still requires approval from the Nigerian government and similar exits by other international oil companies have proven to be complicated.
ExxonMobil, which also began operations in Nigeria in the 1950s, agreed to sell its oil business in the Niger Delta two years ago for $1.28bn but is yet to complete the transaction after the regulator insisted on reviewing the deal.
Shell was granted its first exploration licence to prospect for oil onshore in Nigeria in 1938 and drilled the country’s first successful well in 1956 in Bayelsa state in the Niger Delta.
Oil production in the delta has since generated billions of dollars in revenues for the companies and the government but become increasingly costly for international operators.
SPDC controls 30 per cent of the so-called SPDC joint venture in partnership with the state-owned Nigerian National Petroleum Corporation, which controls 55 per cent.
Local units of France’s TotalEnergies and Italy’s Agip own 10 per cent and 5 per cent, respectively. The joint venture controls 18 oil production licences and is operated by SPDC.
Under the terms of the deal, SPDC, which is one the best-known companies in Nigeria’s oil industry, will remain intact and continue to operate the joint venture, Shell said.
SPDC and its new owners will also be responsible for the company’s ongoing contribution to the remediation of past environmental damage, it said.
