Shell’s Decision to Sell Onshore Business in Nigeria

Shell has reached an agreement to sell its onshore business in Nigeria’s Niger Delta for a substantial sum of $2.4 billion to a consortium of companies. This move is part of Shell’s efforts to reduce its involvement in the West African nation, where it has faced criticism for environmental pollution caused by the oil industry.

Zoe Yujnovich, Shell’s integrated gas and upstream director, stated that the sale of the onshore business in Nigeria is a significant step for the company. It aligns with their previously announced intention to exit onshore oil production in the Niger Delta. This decision will enable them to simplify their portfolio and focus future disciplined investment in Nigeria on their deepwater and integrated gas position.

The consortium that is buying the business is called Renaissance, consisting of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, according to Shell. The acquisition will involve an initial payment of $1.3 billion, with an additional $1.1 billion to follow.

The onshore assets being sold by Shell are primarily owned by the Nigerian government’s national oil company NNPC, holding a 55% stake, with Shell operating the assets and owning a 30% stake, while France’s TotalEnergies and Italy’s Eni hold the remaining shares.

However, environmental activists in the Niger Delta are raising concerns. Ledum Mitee, a veteran environmental activist and former president of the Movement for the Survival of Ogoni People, emphasized that the environmental and decommissioning issues must be adequately and transparently addressed before the government grants approval for the divestment.

Nigeria’s heavy dependence on the Niger Delta’s petroleum resources for its earnings has been accompanied by severe pollution from oil and natural gas production. This has led to the population’s inability to access clean water, damaged farming and fishing, and heightened tensions in the region.

Fyneface Dumnamene, director of the Youths and Environmental Advocacy Centre, has urged the Nigerian government to require Shell and the new buyers to provide a plan for addressing environmental damage and compensating communities before granting approvals for the sale.

In response to these concerns, Shell has stated that the sale has been designed to preserve the company’s role in conducting remediation as the operator of the joint venture where spills may have occurred in the past from the joint venture’s operations.

While this sale represents a significant shift for Shell, the company will still maintain at least three subsidiary operations in Nigeria, including Gulf of Guinea deepwater operations, an industrial gas business, and solar power for industrial activities. These are separately incorporated subsidiaries and will be outside the scope of the transaction with Renaissance, according to Shell.

In conclusion, the sale of the onshore business in Nigeria by Shell to the consortium of companies marks a pivotal moment in the energy company’s operations within the country. However, the concerns raised by environmental activists highlight the importance of addressing the long-standing issues of pollution and environmental damage before the divestment is approved. The Nigerian government must carefully consider the implications of this sale and ensure that the interests of the local communities and the environment are safeguarded.