Shell bids farewell to onshore oil in Nigeria after almost a century

British energy giant, Shell, is set to conclude nearly a century of onshore oil and gas operations in Nigeria, announcing the sale of its subsidiary to a consortium of mostly local companies for up to $2.4 billion.

This is based on a Reuters report.

This move comes after years of struggles with onshore oil spills due to theft, sabotage, and operational issues that led to costly repairs and legal challenges.

Shell has been actively seeking to sell its Nigerian onshore assets since 2021 but will continue its presence in Nigeria's more lucrative and less problematic offshore sector.

The sale involves The Shell Petroleum Development Company of Nigeria Limited (SPDC) and is valued at $1.3 billion, with the buyers making an additional payment of up to $1.1 billion relating to prior receivables at completion.

The Renaissance consortium, comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, a Swiss-based trading and investment company, will take over responsibility for handling spills, theft, and sabotage.

However, the sale requires approval from the Nigerian government.

Reuters cited Zoë Yujnovich, Shell's head of upstream, who highlighted the significance of the agreement, stating, "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."

Yujnovich emphasised Shell's commitment to a disciplined investment strategy in Nigeria's offshore sector.

The sale of onshore assets is part of a broader trend where western energy companies, including Exxon Mobil, Eni, and Equinor, are retreating from Nigeria to concentrate on more profitable operations.

While Shell will part ways with onshore operations, it will retain other assets, including a liquefied natural gas plant, in Nigeria.

Nnimmo Bassey, Executive Director of the Nigerian advocacy group Health of Mother Earth Foundation, stressed that Shell must take responsibility for the environmental damage caused by spills.

"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," he told Reuters.

(With inputs from Reuters)