Shell Plc has agreed to sell its Nigerian onshore oil and gas subsidiary, the Shell Petroleum Development Company of Nigeria Limited (SPDC), to a local consortium for over $1.3 billion, pending government approval.
Zoe Yujnovich, Shell’s Integrated Gas and Upstream Director, confirmed the agreement on Tuesday, January 16, 2024.
The deal includes Shell’s divestment of SPDC for $1.3 billion, with additional payments of up to $1.1 billion.
“This agreement marks an important milestone for Shell in Nigeria,” Zoe Yujnovich said in the statement.
“It simplifies our portfolio and focuses future disciplined investment in Nigeria on our deepwater and integrated gas positions, he added.
SPDC Limited, which holds a 30% stake in the joint venture with 18 onshore and shallow water mining leases, will remain the operator, alongside other partners like the Nigerian National Petroleum Corporation (55%), TotalEnergies (10%), and Italy’s Eni (5%).
Despite exiting onshore operations, Shell will retain its liquefied natural gas plant and other assets in Nigeria.
The move is part of Shell’s strategic shift towards deepwater and integrated gas projects in Nigeria. The buyer, Renaissance, is a consortium comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
Shell, active in Nigeria since the 1930s, has faced challenges such as oil spills, theft, and operational issues, leading to its decision to divest its Nigerian oil and gas business in 2021.
The deal is expected to fulfil Shell’s long-term goal of extracting itself from a challenging operating environment in the Niger Delta, where for decades the company has been at odds with local communities over oil spills and accusations of human rights violations.
The deal is also expected to simplify Shell’s portfolio and focus future disciplined investment in Nigeria on its deepwater and integrated gas positions.
The impact of this deal on the Nigerian economy and the oil and gas industry remains to be seen. However, it is expected that the gradual departure of international oil majors from the West African country will boost the presence of local companies.
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