International oil giant, Shell Plc says it has reached an agreement to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion.
The agreement, is, however, pending government approval.
The purchasing consortium, named Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, all of which are based in Nigeria, according to the statement.
In a statement on Tuesday, Shell’s Integrated Gas and Upstream Director, Zoe Yujnovich, highlighted the significance of the deal, emphasising the company’s focus on streamlining its portfolio and directing disciplined investments towards deepwater and integrated gas ventures in Nigeria.
The move aligns with Shell’s strategic objective to exit the challenging operating environment in the Niger Delta region.
According to the statement, in addition to the initial sum, Shell anticipates receiving extra payments of up to $1.1 billion.
If approved by the government, the transaction would fulfill Shell’s long-term goal of moving out of the challenging operating environment in the Niger Delta region, while retaining a presence elsewhere in the country.
Beyond the initial price tag, Shell said 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,” Zoe Yujnovich, integrated gas and upstream director, said in a statement on Tuesday. The deal is “simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions”
The announcement comes after a protracted 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.
The Supreme Court had earlier upheld Shell’s appeal against the 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 per cent stake in Nigeria LNG, which produces and exports liquefied natural gas.
