Shell to Divest Nigeria Oil Business Amid Activist Concerns

Shell has announced the sale of its onshore business in Nigeria’s Niger Delta for $2.4 billion. This decision is part of the company’s strategy to reduce its presence in the West African nation in response to concerns about environmental pollution caused by the oil industry.

The agreement involves the transfer of onshore assets to a consortium of companies, allowing Shell to streamline its operations in a country where it has long been active. The company has faced criticism for oil spills that have harmed the environment and fueled tensions in the region, known for militant violence.

Zoe Yujnovich, Shell’s integrated gas and upstream director, views the sale as a significant milestone for the company in Nigeria. It is consistent with their previous announcement to exit onshore oil production in the Niger Delta, enabling Shell to focus future investments in Nigeria on deepwater and integrated gas positioning, effectively simplifying their portfolio.

The purchasing consortium, Renaissance, includes ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, according to Shell. The company, based in London, is set to receive a total of $2.4 billion, with an initial payment of $1.3 billion followed by an additional $1.1 billion.

The assets being sold are primarily owned by the Nigerian government’s national oil company NNPC, with a 55% stake. Approval from the government is required to finalize the agreement. Shell operates the assets and holds a 30% stake, while France’s TotalEnergies and Italy’s Eni hold 10% and 5% respectively.

The assets being offloaded include 15 onshore mining leases and three shallow-water operations. However, activists in the Niger Delta are concerned about the environmental damage caused by Shell’s operations. They are planning to ask the government to withhold its approval unless the company addresses its legacy environmental issues.

The petroleum resources of the Niger Delta are crucial for Nigeria’s economy, but pollution from oil and gas production has had severe impacts on the local population. Access to clean water has been hindered, farming and fishing have been affected, and tensions have escalated as a result.

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

Shell has assured that it has structured the sale to retain the company’s responsibility to conduct any necessary remediation as the operator of the joint venture where spills may have occurred in the past.

If the transaction is approved, Shell will continue to have three subsidiary operations in Nigeria, which include its Gulf of Guinea deep-water operations, an industrial gas business, and solar power for industrial activities.

As Shell makes this substantial move in Nigeria, the future implications for the Niger Delta region are yet to be determined. For further coverage on Africa, please visit the AP News Africa hub at https://apnews.com/hub/africa.