Shell Sells Onshore Assets in Nigeria’s Niger Delta in $2.4B Deal

Shell has announced the sale of its onshore business in Nigeria’s Niger Delta to a consortium of companies for a substantial $2.4 billion. The decision reflects the energy company’s desire to reduce its presence in the West African nation in response to ongoing concerns about environmental pollution stemming from the oil industry.

This move aligns with Shell’s broader strategy to streamline its operations in a country where it has long been established. The company has faced criticism for oil spills that have had adverse effects on rivers, farms, and the overall environment, exacerbating existing tensions in the region.

Zoe Yujnovich, Shell’s integrated gas and upstream director, has described this agreement as a significant milestone for the company in Nigeria. It is consistent with Shell’s previous announcement of its intention to withdraw from onshore oil production in the Niger Delta. Yujnovich emphasized that this decision will allow Shell to simplify its portfolio and focus future investments in Nigeria on deepwater and integrated gas operations.

The buying consortium, Renaissance, is composed of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, as confirmed by Shell. The deal involves an initial payment of $1.3 billion, with an additional $1.1 billion to follow.

It is worth noting that the assets being sold by Shell are mostly owned by the Nigerian government’s national oil company NNPC, which holds a 55% stake. However, the finalization of the agreement is subject to government approval. Shell currently operates the assets and holds a 30% stake, with France’s TotalEnergies and Italy’s Eni owning 10% and 5%, respectively.

Despite this transaction, Shell will retain at least three subsidiary operations in Nigeria, including its Gulf of Guinea deepwater operations, an industrial gas business, and solar power for industrial activities. These operations are outside the scope of the deal with Renaissance.

While this development represents a significant shift in Shell’s operations in Nigeria, environmental activists in the Niger Delta have raised concerns. Ledum Mitee, a veteran environmental activist, and former president of the Movement for the Survival of Ogoni People, has stressed the need to address the environmental damage caused by Shell before the government approves the transaction.

Fyneface Dumnamene, director of the Youths and Environmental Advocacy Centre, has called on the Nigerian government to hold Shell and the new buyers accountable for addressing environmental damage and compensating affected communities. It remains to be seen how these concerns will be addressed as the approval process unfolds.

Given Nigeria’s heavy reliance on the petroleum resources of the Niger Delta for its earnings, the impact of pollution from oil and natural gas production cannot be understated. It not only hinders access to clean water for residents but also has a detrimental impact on farming, fishing and contributes to heightened tensions in the region.

The sale of Shell’s onshore assets in Nigeria’s Niger Delta marks a significant development with far-reaching implications. The environmental and social impact of this move, as well as the future trajectory of the region’s oil industry, will undoubtedly be closely monitored in the coming months.