Global Oil Giant, Shell Makes Decision to Sell Nigerian Onshore Oil and Gas Business
After an almost century-long period of operation, the British energy corporation Shell has declared its intention to offload its Nigerian onshore oil and gas division for a sum of up to $2.4 billion. This move comes in the wake of numerous challenges stemming from numerous oil leaks at its onshore sites, resulting in substantial repair costs and legal actions.
The corporation aims to divest its onshore business to a consortium primarily consisting of local enterprises, comprising four Nigerian-based exploration and production companies – ND Western, Aradel Energy, First E&P, and Waltersmith – as well as the Swiss-based trading and investment firm Petrolin. The finalization of the deal is contingent upon approvals from the Federal Government of Nigeria and fulfillment of other stipulated conditions.
Despite the divestment of its onshore assets, Shell is committed to maintaining its presence in Nigeria’s offshore market, which is perceived to be more lucrative and less problematic. The company has expressed its dedication to continuing its operations in the country’s offshore sector.
The sale of its onshore oil and gas business in Nigeria is part of Shell’s broader efforts to achieve a reduction in structural costs of up to $3 billion by 2025. Additionally, the company has pledged to allocate $5 billion towards offshore oil investment opportunities in Nigeria and has committed a further $1 billion over the next five to ten years to bolster natural gas production for domestic consumption and exports.
Furthermore, Shell has asserted that the sale of its onshore assets will not impede the operational capabilities of SPDC. The employees of SPDC will continue their employment with the company following the ownership transition, and SPDC will remain the operator even after the completion of the transaction.
In addition to its onshore and shallow water mining leases, Shell’s SPDC Limited operates the joint venture and holds a 30% stake in it. The other partners in the joint venture are the Nigerian National Petroleum Corporation (NNPC) of the state, TotalEnergies, and Eni.
It is important to underscore that Shell’s decision to divest its Nigerian onshore oil and gas business is a momentous development in the energy sector, carrying potential ramifications for the Nigerian economy and the global oil market.
In conclusion, Shell’s resolution to offload its onshore oil and gas business in Nigeria is indicative of its strategic realignment and emphasis on capitalizing on opportunities in the offshore market. The sale marks a significant departure in the company’s operations subsequent to years of grappling with challenges in its onshore facilities. The completion of the transaction and the ensuing investment commitments signal a new chapter for Shell in Nigeria and could hold broader implications for the energy industry as a whole.
