Shell’s Big Move: Letting Go of Nigerian Onshore Oil Business
It has been widely rumored for some time, but it is now official: Shell Plc is bidding farewell to its Nigerian onshore oil and gas subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC). The deal, valued at a substantial $2.4 billion, involves the sale of SPDC to a consortium of five companies known as Renaissance. This significant decision marks the conclusion of Shell’s lengthy and eventful operations in Nigeria, which date back almost a century.
According to the official announcement, Shell aims to divest the SPDC for $1.3 billion, with additional payments of up to $1.1 billion, underscoring the considerable value of this transaction. Despite this major move, SPDC Limited will continue to operate with its 30% stake in the SPDC joint venture, holding 18 onshore and shallow water mining leases. Notable partners in the joint venture include the Nigerian National Petroleum Corporation (55%), TotalEnergies (10%), and Italy’s Eni (5%).
It is important to note that while Shell is exiting its onshore operations, the company is retaining its liquefied natural gas plant and other assets in Nigeria. This strategic restructuring is not surprising, given the various challenges faced by Shell in the region, including spills, theft, and operational difficulties.
In a press release, Shell stated, “This agreement marks an important milestone for Shell in Nigeria. It simplifies our portfolio and focuses future disciplined investment in Nigeria on our deepwater and integrated gas positions.” These remarks were made by Zoe Yujnovich, the integrated gas and upstream director, signifying the company’s commitment to redirecting its resources towards deepwater and integrated gas projects in Nigeria.
On the other side of the deal, the consortium known as Renaissance, comprised of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, has emerged as the buyer of the SPDC, embracing the opportunity to be at the helm of this influential business in Nigeria.
Shell has been an active player in the Nigerian oil and gas industry since the 1930s, but it is no secret that the company has encountered various challenges along the way. The region has experienced numerous oil spills, primarily attributed to theft, sabotage, and operational issues, prompting Shell’s decision to divest its Nigerian oil and gas business as early as 2021.
As the curtains close on Shell’s onshore operations in Nigeria, the broader picture involves a strategic shift towards deepwater and integrated gas projects. While the landmark move marks the end of an era, it also sets the stage for a new chapter in the company’s extensive history.
