Shell to exit Nigeria's troubled onshore oil after nearly a century
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[January 16, 2024] By
Ron Bousso
LONDON (Reuters) -Shell is set to conclude nearly a century of
operations in Nigerian onshore oil and gas after agreeing to sell its
subsidiary there to a consortium of five mostly local companies for up
to $2.4 billion.
The British energy giant pioneered Nigeria's oil and gas business
beginning in the 1930s. It has struggled for years with hundreds of
onshore oil spills as a result of theft, sabotage and operational issues
that led to costly repairs and high-profile lawsuits.
Since 2021, Shell has sought to sell its Nigerian oil and gas business,
but will remain active in Nigeria's more lucrative and less problematic
offshore sector.
Shell's exit is part of a broader retreat by western energy companies
from Nigeria as they focus on newer, more profitable operations. Exxon
Mobil, Italy's Eni and Norway's Equinor have struck deals to sell assets
in the country in recent years.
The British major will sell The Shell Petroleum Development Company of
Nigeria Limited (SPDC) for a consideration of $1.3 billion, it said in a
statement, while the buyers will make an additional payment of up to
$1.1 billion relating to prior receivables at completion.
"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," Shell head of upstream Zoë Yujnovich said.
The buyer, the Renaissance consortium comprises ND Western, Aradel
Energy, First E&P, Waltersmith, all local oil exploration and production
companies, and Petrolin, a Swiss-based trading and investment company.
The sale, which Renaissance confirmed, requires the approval of the
Nigerian government.
SPILLS AND LAWSUITS
Renaissance will take over the responsibility for dealing with spills,
theft and sabotage, said Shell, which has faced in recent years multiple
lawsuits for compensation over damage caused as a result of spills in
the Niger delta.
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The Shell logo is seen at a petrol station in south London January
31, 2008. Royal Dutch Shell posted record European company earnings
of $27.6 billion (13.9 billion pounds) in 2007, but fourth-quarter
profit missed forecasts as a fall in production dampened the benefit
of high oil prices. REUTERS/Toby Melville/File Photo
Nnimmo Bassey, Executive Director of Nigerian advocacy group Health
of Mother Earth Foundation said: "Shell must own up to its
responsibility."
"This means full payment for the remediation and restoration of the
polluted areas as well as reparations to the host communities. They
cannot walk away from the virtually irreparable harm they have
caused," Bassey said in a statement.
Shell's SPDC Limited operates and has a 30% stake in the SPDC joint
venture that holds 18 onshore and shallow water mining leases.
Shell's resources in SPDC reached around 458 million barrels of oil
equivalent by the end of 2022.
Other partners in the joint venture are the state's Nigerian
National Petroleum Corporation (NNPC), which holds 55%,
TotalEnergies, with 10% and Italy's Eni with 5%.
Apart from its operations and stakes in several fields deep
offshore, Shell still has a liquefied natural gas plant and other
assets in Nigeria.
SPDC, which remains the operator, was formed in 1979, incorporating
assets of the older Shell-BP consortium, with its current partners
entering at later stages.
(Reporting by Ron Bousso; additional reporting by Tife Owolabi in
Yenegoa and Camillus Eboh in Abuja; editing by Louise Heavens, Jason
Neely and Barbara Lewis)
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