By Rhodri Morgan
Shell has sold off its stake in the Nigerian onshore oil market as a result of elevated operational risk in the region.
The oil major said today that Shell Petroleum Development Company (SPDC) has been sold to Renaissance, a consortium of five undisclosed companies comprising four Nigerian exploration and production firms; ND Western, Aradel Energy, First E&P and Waltersmith and Polish energy group, Petrolin.
Total value of the sale was not disclosed, though Shell said the consideration payable for the transaction and additional payments total around $2.4bn.
Following completion, Shell will retain a role in supporting the management of SPDC facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG.
The oil major is understood to have divested its stake in the Nigerian onshore oil industry as a result of the region’s trouble with sabotage and theft from wells and pipelines, estimated by one industry source to account for around 93 per cent of oil ‘spill’ incidences in the country.
The troubles have been well-documented and the company has been forced to pay damages to Nigerian farmers for spills as recently as 2021.
As a result, the projects no longer represent an appropriate return on investment or manageable risk appetite.
The company said it remained committed to its role as a “major investor” in Nigeria’s energy sector through its offshore and gas businesses.
“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions” said Zoë Yujnovich, Shell’s integrated gas and upstream director.
The news comes on the same day as Shell opted to pause all Red Sea shipping in fear of continued assaults on Western vessels by Houthi rebels in retaliation for US and UK missile strikes in the region last week.
