Shell, the British energy giant, is set to conclude nearly a century of onshore oil and gas operations in Nigeria by agreeing to sell its subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium of five predominantly local companies for up to $2.4 billion.
This marks a significant move in line with Shell’s strategic decision to exit onshore oil production in the Niger Delta while maintaining focus on Nigeria’s more lucrative and less problematic offshore sector.
Shell, a pioneer in Nigeria’s oil and gas sector since the 1930s, has faced persistent challenges with onshore operations, including hundreds of oil spills resulting from theft, sabotage, and operational issues.
These incidents led to costly repairs, high-profile lawsuits, and heightened environmental concerns. The sale to the Renaissance consortium, comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, a Swiss-based trading and investment company, will see them take over responsibilities related to spills, theft, and sabotage.
The agreement involves Shell selling SPDC for a consideration of $1.3 billion, with an additional payment of up to $1.1 billion relating to prior receivables at completion. The transaction is subject to approval by the Nigerian government.
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Zoë Yujnovich, Shell’s Head of Upstream, stated, “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.”
The Renaissance consortium’s acquisition of SPDC brings together local oil exploration and production companies, emphasizing a shift towards indigenous participation in the country’s energy sector.
Environmental advocacy groups in Nigeria, such as the Health of Mother Earth Foundation, stress the importance of Shell taking responsibility for the environmental impact caused by spills in the Niger Delta. Nnimmo Bassey, the Executive Director of the foundation, emphasized that Shell must fulfill its obligations through full payment for remediation and restoration of polluted areas, along with reparations to the affected host communities.
As Shell prepares to exit its onshore oil operations, it retains other assets in Nigeria, including a liquefied natural gas plant and interests in offshore fields. The sale reflects a broader trend of western energy companies withdrawing from onshore operations in Nigeria, redirecting their focus toward newer and more profitable ventures.
