Shell To Divest Nigerian Onshore Operations After 88 Years
Shell Plc has recently completed the sale of its Nigerian onshore oil and gas assets, the Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium of five companies known as Renaissance, for a staggering $2.4 billion. This sale marks the end of Shell’s nearly century-long operations in Nigeria, signifying the company’s withdrawal from Nigeria’s onshore operations after establishing its presence in the country 88 years ago.
According to the official announcement, Shell is divesting the SPDC for $1.3 billion, with additional payments of up to $1.1 billion. As part of this transition, Aradel Holdings Plc, a leading integrated indigenous energy company in Nigeria, has acquired an equity interest in the divested SPDC assets through its subsidiary Aradel Energy Limited.
This acquisition is a significant one, with Renaissance Africa Energy Company Limited and Shell International Plc agreeing for the consortium to acquire the complete 100 per cent shareholding in The Shell Petroleum Development Company of Nigeria Limited (SPDC). Renaissance consists of ND Western Limited, Aradel Energy Limited, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and the Waltersmith Group, all of which have established and proven operational capabilities.
Following the acquisition, Aradel has expressed its commitment to collaborate with all stakeholders in Renaissance and the SPDC Joint Venture to ensure a smooth transition and drive continued growth and success in Nigeria and beyond. However, the completion of the deal is dependent on meeting conditions precedent and obtaining approvals from the Federal Government of Nigeria.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, highlighted that the deal will streamline the company’s portfolio and allow it to focus on disciplined investment in Nigeria, particularly targeting its deepwater and Integrated Gas positions. The acquisition is poised to preserve SPDC’s operating capabilities for the benefit of the joint venture, including technical expertise, management systems, and processes, as well as the employment of SPDC’s staff as ownership transitions to the new consortium. Shell will also retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG). This agreement underscores Shell’s commitment to Nigeria’s energy sector and aligns with its strategy of pursuing investments that cater to the country’s growing energy needs and export ambitions.
The government of Nigeria has expressed its intent to surpass its 2024 oil production target, with the Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, reaffirming the country’s commitment to achieving and potentially exceeding the target of 1.7 million barrels per day (bpd) of crude oil production by 2024. Nigeria recently secured investments totalling $13 billion in the oil and gas sector from major international energy companies, including ExxonMobil, Shell, and TotalEnergies, in a strategic move to address the country’s revenue crisis and stabilise the economy by leveraging the critical role of the oil and gas sector.
With the acquisition of SPDC’s onshore assets and the subsequent commitment to enhance Nigeria’s oil production, it is evident that the energy sector holds great promise for Nigeria’s economic growth and stability. Nigeria aims to ramp up its oil production to meet local demand and secure a higher quota in the OPEC+ agreement, aligning with its aspirations for sustainable development and prosperity.
In conclusion, the divestiture of Shell’s onshore assets constitutes a significant transition in Nigeria’s energy landscape, with the potential to bolster the country’s status as a key player in the global oil and gas industry. By forging strategic partnerships and fostering investments, Nigeria is positioned to capitalise on its energy resources and drive economic progress in the years to come.
