Shell’s $2.4bn Sale of Nigerian Onshore Business

The Shell Petroleum Development Company of Nigeria (SPDC) is set to undergo acquisition by a consortium of five companies known as Renaissance in a deal worth $2.4 billion. This agreement signifies Shell’s divestment of its onshore business in Nigeria to Renaissance.

The consortium, consisting of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, will assume control of SPDC’s operations. Shell has ensured that the deal is structured in a manner that maintains SPDC’s operational capabilities to support the SPDC Joint Venture (SPDC JV), in which SPDC holds a 30% stake and serves as the operator.

The SPDC JV possesses a total of 18 oil mining leases for onshore and shallow water petroleum operations in Nigeria. Other partners in the SPDC JV include the Nigerian National Petroleum Corporation (55%), Total Exploration and Production Nigeria (10%), and Nigeria Agip Oil Company (5%).

As part of the transition, SPDC’s employees will continue to work for the company under the new ownership. Following the completion of the transaction, Shell will continue to provide support for the management of SPDC JV facilities that supply feed gas to Nigeria LNG (NLNG). It is important to note that Shell’s 25.6% interest in NLNG is not included in this transaction.

This sale does not signal a complete departure for Shell from Nigeria, as the company will still maintain a significant presence in the country through three businesses that are not included in the deal. These businesses consist of Shell Nigeria Exploration and Production Company, which operates in the deepwater Gulf of Guinea; Shell Nigeria Gas, which supplies gas to local industries and commercial customers; and Daystar Power Group, which provides solar power solutions across West Africa.

Nigeria, as Africa’s leading oil exporter, aims to increase its oil and condensates production to 2.6 million barrels per day by 2026. The country has encountered challenges with declining production due to crude theft, pipeline vandalism, and underinvestment in the industry.

Shell’s sale of its Nigerian onshore business to Renaissance reflects the evolving landscape of the oil and gas industry as companies navigate changing market conditions and strategic priorities. This transaction signifies a significant development in Shell’s global portfolio and its ongoing commitment to the Nigerian market.