Shell’s Big Move: Exiting Onshore Oil Business in Nigeria
The British energy giant Shell has made a significant decision to divest its Nigerian onshore oil and gas unit, potentially fetching up to $2.4 billion. This move comes after a long-standing presence in Nigeria, where the company has faced various challenges.
Operating in Nigeria since the 1930s, Shell has encountered substantial difficulties, primarily due to oil spills at its onshore facilities. These spills have resulted in costly repairs and legal battles due to theft, sabotage, and operational issues. Despite these challenges, the company is now ready to strategically exit its onshore business.
The decision to divest from its Nigerian onshore operations has been in progress since 2021. However, Shell is not bidding farewell to Nigeria’s entire oil and gas sector, as it plans to maintain its presence in the country’s offshore market, which is considered to be more profitable and less challenging.
By parting ways with its onshore assets, Shell aims to achieve its long-term goal of disengaging from the complexities of operating in the Niger Delta. The proposed sale of The Shell Petroleum Development Company of Nigeria Limited (SPDC) for $1.3 billion, with an additional payment of up to $1.1 billion for previous receivables, highlights the company’s commitment to this strategic shift.
The acquiring consortium includes local oil exploration and production firms ND Western, Aradel Energy, First E&P, Waltersmith, and the Swiss-based trading and investment firm Petrolin. Despite the sale, SPDC will continue to operate under its new ownership.
The Nigerian National Petroleum Corporation (NNPC) holds a 55% stake in the venture, with TotalEnergies owning 10% and Eni, an Italian company, holding 5%. These entities are among the partners that will influence the future of onshore oil and gas operations in Nigeria.
While Shell is bidding farewell to its onshore ventures, it remains active in Nigeria with its deep offshore activities and holdings, including a liquefied natural gas facility and other assets. This move is expected to streamline Shell’s operations and pave the way for new opportunities.
In conclusion, Shell’s decision to exit its onshore oil business in Nigeria marks a significant moment in the company’s century-long history in the country. It reflects a strategic realignment that underscores the company’s commitment to sustainable growth and operational excellence.
Author: Ozioma Samuel-Ugwuezi
