Shell’s New Move in Nigeria Oil Business Sparks Environmental Concerns
In a recent announcement, Shell has disclosed its decision to sell its onshore business in Nigeria’s Niger Delta to a consortium of companies for a substantial $2.4 billion. This development follows persistent complaints about environmental pollution caused by oil industry operations in the region. The energy company aims to streamline its business in Nigeria, a country where it has operated for decades amidst ongoing tensions and conflicts arising from oil spills and their detrimental impact on the local environment.
Zoe Yujnovich, Shell’s integrated gas and upstream director, underscored the significance of this agreement, affirming that it is in line with the company’s intention to exit onshore oil production in the Niger Delta. This strategic move seeks to simplify Shell’s portfolio and redirect future investments in Nigeria towards its deepwater and integrated gas activities.
The purchasing consortium, Renaissance, is comprised of ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin. Shell has indicated that it will receive an initial payment of $1.3 billion, followed by an additional $1.1 billion. The sale involves assets primarily owned by the Nigerian government’s national oil company NNPC, with Shell as the operator and a 30% stakeholder, and TotalEnergies and Eni as minority stakeholders.
While this transaction represents a significant shift in Shell’s operations in Nigeria, concerns have been raised by environmental activists in the Niger Delta. Ledum Mitee, a veteran environmental activist, has emphasized the need to address the environmental and decommissioning issues before granting approval for the divestment, echoing the sentiments of many local communities impacted by the oil industry’s activities.
The Niger Delta, which is a vital source of petroleum resources for Nigeria, has suffered immensely from pollution caused by oil and natural gas production. This has resulted in severe water contamination, damage to agriculture and fishing, and heightened social tensions. Despite government efforts to address these issues, such as the amnesty program for former militants, the region continues to grapple with violence and insecurity, with militants resorting to attacks on oil facilities and kidnapping for ransom.
Fyneface Dumnamene, director of the Youths and Environmental Advocacy Centre, has urged the Nigerian government to ensure that Shell and the new buyers provide a comprehensive plan for addressing environmental damage and compensating affected communities before granting approvals for the sale. In response, Shell has assured that the sale has been structured to preserve its role in conducting remediation as the operator of the joint venture where spills may have occurred in the past.
Should approval be granted, Shell will retain its subsidiary operations in Nigeria, which include its Gulf of Guinea deepwater operations, an industrial gas business and solar power for industrial activities. These operations are separate from the transaction with Renaissance and will remain under Shell’s purview.
As discussions and negotiations unfold, the future implications of this sale on the environmental landscape of the Niger Delta are uncertain. The environmental concerns raised by activists highlight the necessity of prioritising sustainable and responsible practices within the oil industry, particularly in regions with vulnerable ecosystems and communities.
In conclusion, Shell’s decision to divest its onshore business in Nigeria reflects an industry-wide shift towards more sustainable and environmentally conscious operations. Nonetheless, the imperative to address and mitigate the existing environmental damage is paramount, as it would mark a crucial step towards fostering a more harmonious relationship between the oil industry and the local communities it impacts.
