Shell to Sell Onshore Business in Nigeria’s Niger Delta

by Warren Seah

Shell has reached an agreement to sell its onshore business in Nigeria’s Niger Delta to a consortium of companies in a deal worth $2.4 billion, as the energy company aims to reduce its exposure in the West African nation and address longstanding complaints about environmental pollution caused by the oil industry.

The move is part of Shell’s efforts to streamline its operations in Nigeria, where it has been operating for many years. The company has faced criticism for oil spills that have polluted rivers and farms, perpetuating tensions in a region marked by years of militant violence.

Zoe Yujnovich, Shell’s integrated gas and upstream director, 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.” Yujnovich further explained that the sale will allow Shell to simplify its portfolio and focus on deep-water and integrated gas positions in Nigeria.

The buying consortium, known as Renaissance, consists of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin. Shell will initially receive $1.3 billion, followed by an additional $1.1 billion.

The assets being sold by Shell are primarily owned by the Nigerian government’s national oil company NNPC, which holds a 55% stake. The government’s approval is required to finalize the agreement. Shell currently operates the assets and holds a 30% stake, while TotalEnergies and Eni own 10% and 5% shares, respectively.

The assets involved in the deal include 15 onshore mining leases and three shallow-water operations.

Local activists in the Niger Delta, who have raised concerns about Shell’s environmental impact over the years, have stated that they will urge the government to withhold approval if the company does not address the ecological damage it has caused.

The Environmental Challenges in Nigeria’s Niger Delta

The issues surrounding the petroleum industry in Nigeria’s Niger Delta region are of great concern, particularly when it comes to environmental and decommissioning problems. Ledum Mitee, a respected environmental activist and former president of the Movement for the Survival of Ogoni People, emphasizes the need for these issues to be adequately and transparently addressed before any divestment takes place.

Nigeria heavily relies on the oil and natural gas resources found in the Niger Delta for its economic earnings. However, the pollution resulting from oil and gas production has had severe consequences. Access to clean water has been impeded, farming and fishing industries have been impacted, and tensions have risen as a result.

Exploiting the situation, militants have significantly disrupted the oil industry through attacks on facilities and kidnappings of foreign citizens in exchange for ransom. The government’s amnesty package eventually mitigated these activities, but the Niger Delta region remains unstable. Violence risks persist, including pipeline vandalism by oil thieves who are often held responsible for oil spills.

Fyneface Dumnamene, director of the Youths and Environmental Advocacy Centre, calls on the Nigerian government to demand a comprehensive plan from Shell and any future buyers to address environmental damage and provide compensation to affected communities before granting approval.

In response, Shell has stated that their sale is designed with a focus on preserving their responsibility as the operator of the joint venture. They assure that any necessary remediation will be conducted for any past spills resulting from these operations.

Even if the transaction is approved, Shell will still maintain at least three subsidiary operations in Nigeria. This includes their Gulf of Guinea deep water operations, an industrial gas business, and solar power for industrial activities. These subsidiaries are separate from the transaction with Renaissance and fall outside its scope, according to Shell’s statement.

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