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Shell has agreed to sell its onshore oil production business in Nigeria following a flood of other international groups seeking to exit the country’s restive Niger Delta region.
The 68-year-old Shell Petroleum Development Company of Nigeria (SPDC) will be acquired by a consortium of local and international companies for at least $1.3bn, the UK-listed oil major said on Tuesday.
The departure follows ExxonMobil of the US, Italy’s Eni, Norway’s Equinor and China’s Addax, which have all announced deals to sell onshore assets in Nigeria in the past two years because of the difficulties of operating in a region wracked by corruption, violence and environmental damage.
Although Shell is not leaving Nigeria entirely, the sale marks an end of an era for the company, which has been at the centre of the country’s oil industry for almost 100 years.
The group said it would continue to invest in Nigeria, focusing on its deepwater oil operations and integrated gas business.
“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,” said Zoë Yujnovich, Shell’s integrated gas and upstream director, in a statement.
The acquiring consortium, known as Renaissance, includes Switzerland-based Petrolin and four Nigerian oil producers, ND Western, Aradel Energy, First E&P and Waltersmith.
Shell has been seeking to exit its onshore business in Nigeria for the past three years.
It was forced to halt the process in 2022 after a Nigerian court ordered Shell to pause its divestment plans pending the result of a court case related to compensation for environmental damage in the Niger Delta.
Nigeria’s Supreme Court upheld the company’s appeal against this ruling earlier this month, allowing the sales process to resume.
Shell was granted its first exploration licence to prospect for oil onshore in Nigeria in 1938 and drilled the country’s first successful well in 1956 in Bayelsa state in the Niger Delta.
Oil production in the delta, in the south of the country, has since generated billions of dollars in revenues for the companies and the government, becoming the bedrock of the Nigeria economy.
SPDC controls 30 per cent of the so-called SPDC joint venture in partnership with the state-owned Nigerian National Petroleum Corporation, which controls 55 per cent.
Local units of France’s TotalEnergies and Italy’s Agip own 10 per cent and 5 per cent, respectively.
The joint venture controls 18 oil production licences and is operated by SPDC.
