Shell’s $2.4bn Sale of Nigerian Onshore Business

Shell has recently announced that it will sell its onshore business in Nigeria to Renaissance for $2.4 billion. The consortium, consisting of five companies – ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin – will take over the business. As a result, operational capabilities of the SPDC Joint Venture (SPDC JV) will continue to be supported.

The SPDC JV, in which SPDC holds a 30% stake, has 18 oil mining leases for onshore and shallow water petroleum operations in Nigeria. Other significant partners include the Nigerian National Petroleum Corporation, Total Exploration and Production Nigeria, and Nigeria Agip Oil Company, with ownership stakes of 55%, 10%, and 5% respectively.

Despite the sale, all of SPDC’s employees will remain with the company under new ownership, while Shell will continue to support the management of SPDC JV facilities supplying feed gas to Nigeria LNG (NLNG). It is important to note that Shell’s 25.6% interest in NLNG is not part of this transaction.

However, Shell will maintain a strong presence in Nigeria through three businesses not included in the sale: Shell Nigeria Exploration and Production Company, operating in the deepwater Gulf of Guinea, Shell Nigeria Gas, supplying gas to local industries and commercial customers, and Daystar Power Group, offering solar power solutions across West Africa.

Nigeria’s oil and gas regulator aims to increase the country’s oil and condensates production to 2.6 million barrels per day by 2026. This goal comes at a time when the country, as Africa’s leading oil exporter, faces challenges such as declining production due to crude theft, pipeline vandalism, and underinvestment in the industry.

In conclusion, Shell’s divestment of its Nigerian onshore business is a significant business move that will have a lasting impact on the oil and gas industry in the region.