Shell Sells Nigerian Onshore Subsidiary to Renaissance for $1.3 Billion

Shell has recently announced an agreement for the sale of their Nigerian onshore subsidiary, known as The Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance, a consortium composed of five companies. These companies comprise four exploration and production companies based in Nigeria and an international energy group.

The completion of this sale is subject to approval from the Federal Government of Nigeria and other relevant conditions. Following the change of ownership, Shell has strategically planned to maintain SPDC’s full operating capabilities, including technical expertise, management systems, and processes implemented for all the companies in the SPDC Joint Venture (SPDC JV). The staff of SPDC will also continue to be employed during the transition to new ownership.

Shell will continue to have a role in supporting the management of SPDC JV facilities post-transaction. This is crucial as these facilities supply a significant portion of feed gas to Nigeria LNG (NLNG) and is aligned with Shell’s commitment to helping Nigeria achieve maximum value from NLNG.

In a statement, Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, mentioned that this agreement is a significant milestone for Shell in Nigeria. It aligns with their previously announced intention to exit onshore oil production in the Niger Delta, allowing them to simplify their portfolio and focus future disciplined investment in Nigeria on Deepwater and Integrated Gas positions. Yujnovich also expressed Shell’s positive investment outlook for the country’s energy sector, and their commitment to supporting Nigeria’s growing energy needs and export ambitions in areas aligned with their strategy.

Renaissance, the consortium acquiring SPDC, is composed of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin. The financial details of the transaction reveal that the consideration payable to Shell is $1.3 billion, with additional cash payments of up to $1.1 billion expected upon completion. The net book value of the entity subject to this transaction is approximately $2.8 billion as of December 31, 2023.

Shell is set to provide secured term loans of up to $1.2 billion at closing, in addition to offering further financing of up to $1.3 billion over future years to fund SPDC’s share of the development of the SPDC JV’s gas resources and specific decommissioning and restoration costs.

As Shell proceeds with this transaction, it’s important to note that they have three other main businesses in Nigeria outside the scope of this sale, including Shell Nigeria Exploration and Production Company Limited (SNEPCo), Shell Nigeria Gas Limited (SNG), and Daystar Power Group. Furthermore, Shell holds a 25.6% interest in NLNG, which is also not part of this transaction.

This shift in Shell’s strategic focus in Nigeria, with a focus on Deepwater and Integrated Gas positions, is expected to have significant implications for the Nigerian energy sector and is aligned with their commitment to supporting Nigeria’s energy needs and export ambitions. And with the reassurance from the company that there is no expected loss of employment, this transition seems to be a positive step forward for all parties involved.