Reports just coming in suggest that Shell Plc has agreed to sell its Nigerian onshore oil business to a consortium of local companies for an amount worth over $1.3 billion.
Zoe Yujnovich, Shell’s Integrated Gas and Upstream Director who confirmed the development in a statement on Tuesday, highlighted the significance of the deal, emphasizing the company’s focus on streamlining its portfolio and directing disciplined investments towards deepwater and integrated gas ventures in Nigeria.
If approved by the government, the transaction would fulfill Shell’s long-term goal of extracting itself from a challenging operating environment in the Niger Delta region, while retaining a presence elsewhere in the country. Beyond the initial price tag, Shell said that it will receive additional cash payments of as much as $1.1 billion on completion.
“This agreement marks an important milestone for Shell in Nigeria,” said Yujnovich. “The deal is “simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions”.
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The buyer of the asset, known as Renaissance, is formed of exploration and production companies ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin, all of which are based in Nigeria, according to the statement.
According to reports, the announcement comes after a labored sales process that had to be halted in 2022 after a court ruling ordered Shell Petroleum Development Company of Nigeria Ltd. to pause its divestment plans pending the outcome of a court case related to allegations of pollution. Earlier this month, Nigeria’s Supreme Court upheld Shell’s appeal against this ruling.
Shell has pumped oil in Nigeria for more than half a century, but almost three years ago then-Chief Executive Officer Ben van Beurden signaled the company’s intention to exit its onshore oil positions. These operations have become increasingly difficult, with accusations of environmental pollution by local communities, as well as persistent oil theft that caused damage to infrastructure.
Following the sale, Shell will continue operating in the country through its deep-water oil business, Shell Nigeria Exploration and Production Company Ltd.
Another unit that provides gas to domestic industrial and commercial customers, Shell Nigeria Gas Ltd., will continue operating as will solar firm Daystar Power Group. Shell will retain its 25.6% stake in Nigeria LNG, which produces and exports liquefied natural gas.
Story was adapted from Nairametrics.
