Shell to Offload Major Nigeria Oil Business for $2.4 Billion
Shell, one of the world’s largest energy companies, has announced its decision to sell its onshore business in Nigeria’s Niger Delta to a consortium of companies for a staggering $2.4 billion. This move comes as a response to years of environmental pollution complaints caused by the oil industry in the West African nation. The sale, agreed in a deal with Renaissance, which consists of ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin, is an integral part of Shell’s strategy to streamline its operations and mitigate exposure in Nigeria.
Zoe Yujnovich, Shell’s integrated gas and upstream director, described the agreement as a significant milestone for the company in Nigeria, aligning with its previously announced intent to exit onshore oil production in the Niger Delta. The assets being sold include 15 onshore mining leases and three shallow-water operations, predominantly owned by the Nigerian government’s national oil company NNPC, while Shell holds a 30% stake.
Despite the monumental sale, environmental activists in the Niger Delta are advocating for the cleanup of the area before the government grants approval for the transaction. Ledum Mitee, a veteran environmental activist and former president of the Movement for the Survival of Ogoni People, emphasized the importance of adequately and transparently addressing the environmental and decommissioning issues before any eventual divestment.
The Niger Delta, heavily reliant on its petroleum resources, has faced significant pollution from oil and natural gas production, leading to a lack of access to clean water and the deterioration of farming and fishing activities. The volatile situation has been exploited by militants, resulting in attacks on oil facilities and kidnappings. Despite government initiatives to address these issues, the region remains prone to violence and sabotage, including pipeline vandalism by oil thieves.
Fyneface Dumnamene, director of the Youths and Environmental Advocacy Centre, has urged the Nigerian government to hold Shell and the new buyers accountable for addressing environmental damage and compensating affected communities before granting approvals for the sale. Shell has assured that it will conduct any remediation as the operator of the joint venture where spills may have occurred in the past from the joint venture’s operations.
While the sale paves the way for Shell to focus on its deepwater and integrated gas position in Nigeria, the company will retain at least three subsidiary operations in the country, namely its Gulf of Guinea deepwater operations, an industrial gas business, and solar power for industrial activities.
In conclusion, Shell’s decision to offload its onshore business in Nigeria’s Niger Delta marks a significant development in the company’s efforts to reposition its portfolio and address long-standing environmental concerns. The proposed sale presents an opportunity for the Nigerian government and the buying consortium to ensure that environmental remediation and community compensation are prioritised before proceeding with the transaction.
