Shell to Sell Nigerian Onshore Business and Focus on Deepwater and Integrated Gas
In a noteworthy development, UK-based energy corporation Shell has revealed its intentions to divest its Nigerian onshore subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance, a consortium of five companies, for an estimated $2.8 billion. This decision reflects the company’s strategic pivot towards prioritising deepwater and integrated gas operations in Nigeria.
Shell has underscored that the sale process was meticulously devised to ensure the preservation of SPDC’s operational capabilities, including technical expertise and management systems. Additionally, the company is dedicated to maintaining its role in supporting the management of SPDC JV facilities that supply a significant portion of the feed gas to Nigeria LNG.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, has articulated that the agreement with Renaissance marks a pivotal moment for Shell in Nigeria, aligning with the company’s objective to exit onshore oil production in the Niger Delta and streamline its portfolio. She has also emphasised the positive investment outlook for the country’s energy sector and Shell’s ongoing support for Nigeria’s burgeoning energy needs and export ambitions.
As part of the transaction, Renaissance will remit $1.3 billion to Shell, with additional cash payments of up to $1.1 billion, primarily related to prior receivables and cash balances in the business. Furthermore, Shell will extend secured term loans of up to $1.2 billion to cover various funding requirements. The company has also committed to providing additional financing of up to $1.3 billion over the next few years to fund SPDC’s share of the development of the SPDC JV’s gas resources and specific decommissioning and restoration costs.
It is important to note that Shell’s other primary subsidiaries in Nigeria, specifically Shell Nigeria Exploration and Production Company Limited, Shell Nigeria Gas Limited, and Daystar Power Group, will not be included in this divestment process. Additionally, Shell retains a 25.6% interest in NLNG, which falls outside the scope of the ongoing divestment.
In addition to the Nigerian divestment, Shell has been actively engaged in various other initiatives. The company recently made a final investment decision for a deepwater development in the U.S. Gulf of Mexico and finalised the acquisition of the remaining stake in an asset in the U.S. This acquisition has consolidated Shell’s ownership in a deepwater field in the U.S. Gulf of Mexico.
Furthermore, Shell has approved a phased offshore drilling program to enhance production at a development project in the U.S. Gulf of Mexico and sanctioned a two-well drilling campaign in the North Sea for 2024.
Shell’s decision to divest its Nigerian onshore business and refocus on deepwater and integrated gas operations signifies a significant strategic maneuver for the company. This realignment underscores Shell’s commitment to capitalising on emerging opportunities in the energy sector and fortifies its position as a key player in the global energy landscape.
