Shell’s Decision to Exit Onshore Exploration in Nigeria and the Sale of Assets for $1.3 Billion
Shell Plc has recently announced its decision to sell its Nigerian onshore oil assets to a consortium of local companies for over $1.3 billion, signalling its exit from onshore exploration in Nigeria. The company stated that it will sell its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), for a consideration of $1.3 billion, with the buyers also making an additional payment of up to $1.1 billion relating to prior receivables at completion.
The buyer of the asset, known as Renaissance, is a consortium formed of ND Western, Aradel Energy, First Exploration & Production (E&P), Waltersmith, and Petrolin. However, the completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.
Even though Shell is exiting the onshore exploration, the company assured that it will remain a significant investor in Nigeria’s energy sector through its deepwater and integrated gas businesses. Furthermore, following the transaction’s completion, Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), with the aim of helping Nigeria achieve maximum value from NLNG.
The SPDC JV is an unincorporated joint venture comprised of SPDC Ltd, the Nigerian National Petroleum Company Limited, Total Exploration and Production Nigeria Ltd, and Nigeria Agip Oil Company Ltd. It holds 15 oil mining leases for petroleum operations onshore and three for petroleum operations in shallow water in Nigeria, operated by SPDC. “The consideration payable to Shell as part of the transaction is US$1.3 billion,” the statement further reads.
Zoe Yujnovich, Shell’s integrated gas and upstream director, expressed, “This agreement marks an important milestone for Shell in Nigeria.” However, Shell clarified that it has three other main businesses in Nigeria that are outside the scope of the transaction, namely Shell Nigeria Exploration and Production Company Limited (SNEPCo), Shell Nigeria Gas Limited (SNG), and Daystar Power Group.
It’s worth noting that Shell’s exit from onshore exploration is not an isolated case. Other international oil companies have also made similar moves in the past. For instance, Seplat Energy Plc and TotalEnergies made agreements to sell their stakes in Nigerian oil joint ventures. Even Oando and Equinor also made significant divestments from their Nigerian oil operations.
These developments in the Nigerian oil and gas industry reflect the dynamic nature of the sector, as companies evaluate their portfolios and strategic priorities. The sale of Shell’s onshore oil assets to local companies also signals a shift in the landscape of the Nigerian energy sector, paving the way for increased participation and ownership by indigenous companies.
While Shell’s decision to exit onshore exploration in Nigeria may have far-reaching implications, it also presents new opportunities and challenges for both local and international players in the industry. As the Nigerian government and industry stakeholders navigate these changes, the future of the country’s oil and gas sector remains a topic of keen interest and scrutiny.
