Victor EzejaAfter operating for almost a century in the Nigerian oil and gas sector, British Oil multinational, Shell has concluded plans to exit onshore oil operations in the West African country. This is as it has agreed to sell its subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance Africa Energy, a consortium of five companies based in Nigeria for about $2.4 billion.
This was announced in a statement released by the company on Tuesday, 16 January 2024.
According to the statement, the consortium comprises four exploration and production companies based in Nigeria and an international energy group. Renaissance consists of ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin.
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“Shell has reached an agreement to sell its Nigerian onshore subsidiary The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group,” statement read in part.
“Completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions,” the global energy giant added.
Beginning in the 1930s, the British oil major was a pioneer in the oil and gas industry in Nigeria. It has over the years recorded oil spills, in its onshore operations which have resulted in expensive repairs and high-profile legal actions. These were due to oil theft, sabotage facilities, and operational challenges.
Given the troubling operating environment, especially in onshore, coupled with the global energy transition agenda which discourages investment in fossil fuel, Shell has been trying to sell its Nigerian oil and gas company since 2021.
The company said in the statement that it will only exit onshore operations and focus on offshore which is more profitable and trouble-free.
Shell’s departure from Nigeria is a part of a larger retreat by Western energy giants, who are concentrating on other, more lucrative ventures. In recent years, agreements have been reached by Exxon Mobil (XOM.N), Norway’s Equinor (EQNR.OL), and Eni of Italy to sell assets in the Nigeria.
“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” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.
“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.”
Zoë Yujnovich was quoted expressing optimism that 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,” he added.
The company said the deal is designed to preserve its operating capacity for benefit of its Joint Ventures (JV). This includes the technical expertise, management systems and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV).
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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