January 16, 2024 [Reuters]- Shell (SHEL.L) 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.
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.
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.
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.
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 (TTEF.PA), with 10% and Italy’s Eni (ENI.MI) 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.
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