“Shell will remain a major investor in Nigeria’s energy sector through its Deepwater and Integrated Gas businesses” the company said in an official statement on its website on January 16.
Background
The announcement that Africa’s largest Oil producing company, Shell is selling its onshore subsidiary ‘The Shell Petroleum Development Company of Nigeria Limited (SPDC) has generated a lot of debate in the country.
Many have translated the announcement to Shell exiting Nigeria. Considering its existence for over 80 years in the country, it has become a subject of a public debate.
For records, the company has agreed to sell its subsidiary to a consortium of five companies comprising of four exploration and production companies based in Nigeria and an international energy group for up to $2.4 billion.
Essentially, apart from the onshore assets, Shell has three other main businesses in Nigeria as listed in a statement on its official website.
Shell Nigeria Exploration and Production Company Limited (SNEPCo), which produces oil and gas in the deepwater Gulf of Guinea;
Shell Nigeria Gas Limited (SNG), which provides gas to domestic industrial and commercial customers; and Daystar Power Group, which provides integrated solar power to commercial and industrial business across West Africa.
In addition to that, Shell stated that it also holds a 25.6% interest in NLNG, which produces and exports LNG to global markets- this is also said to be outside the scope of this transaction.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director said the sale of the onshore assets will enhance the company’s deepwater and Integrated gas positions.
“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”
“It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium.
“Shell sees a bright future in Nigeria with a positive investment outlook for its energy sector. We will continue to support the country’s growing energy needs and export ambitions in areas aligned with our strategy.”
Who are the new buyer of the company?
The buyers of the subsidiary are 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.
Meanwhile, it has been said that the sale of the subsidiary will require the approval of the Nigerian government.
The transaction, according to Shell has been designed to preserve the full range of SPDC’s operating capabilities following the change of ownership.
This new arrangement includes the technical expertise, management systems and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV).
It also allayed the fear of job loss, adding that the the staff will continue to be employed by the company as it transitions to new ownership.
Following completion of the change of ownership, Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG.
Shell, a British energy giant is reputed to have pioneered Nigeria’s oil and gas business beginning in the 1930s.
It has struggled for years with overlapping problems of oil spills and theft, violence and environmental damage that has attracted costly repairs and high-profile lawsuits.