Shell to Sell Nigeria Onshore Oil Business for Up to $2.4 Billion

In a strategic move, British energy giant Shell is set to offload its Nigerian onshore oil and gas subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium of five predominantly local companies for a substantial $2.4 billion. This landmark decision comes after nearly a century of Shell’s operations in Nigeria, a region fraught with operational challenges and high-profile lawsuits, prompting the company to focus on the more lucrative and less problematic offshore sector in the country.

Shell, a key player in Nigeria since the 1930s, has faced persistent challenges at its onshore operations, grappling with numerous oil spills attributed to theft, sabotage, and operational issues. Seeking to address these concerns and streamline its portfolio, Shell initiated the sale of its Nigerian onshore assets in 2021, aiming to enhance its operational efficiency and refocus on ventures with higher returns.

The consortium acquiring SPDC is known as Renaissance and consists of local oil exploration and production companies, including ND Western, Aradel Energy, First E&P, Waltersmith, and the Swiss-based trading and investment company Petrolin. The deal involves a substantial consideration of $1.3 billion for the sale of SPDC, with an additional payment of up to $1.1 billion linked to prior receivables at completion.

SPDC Limited, the operator with a 30% stake in the SPDC joint venture, holds 18 onshore and shallow water mining leases. While the ownership structure will change hands, SPDC will continue to operate, ensuring a seamless transition of responsibilities within the joint venture. The Nigerian National Petroleum Corporation (NNPC) retains its majority stake of 55%, TotalEnergies holds 10%, and Italy’s Eni maintains a 5% interest.

Shell’s decision to divest its onshore assets aligns with the company’s commitment to navigating a more sustainable and profitable path in Nigeria’s energy landscape. Despite the sale, Shell will maintain its presence in Nigeria through operations and stakes in various offshore fields. It will continue operating in the country through its deep-water oil business, Shell Nigeria Exploration and Production Company Ltd. Shell will also retain its 25.6% stake in Nigeria LNG.

Following the sale, Shell will continue operating in the country through its deep-water oil business, Shell Nigeria Exploration and Production Company Ltd. Shell Nigeria Gas Ltd., responsible for supplying gas to residential, industrial, and commercial clients, and Daystar Power Group, a solar company, remains unaffected. Shell will also retain its 25.6% stake in Nigeria LNG.

Completion of the transaction is subject to the requisite regulatory approvals.