Shell’s plan to divest its stake in Nigeria’s onshore and shallow water operations has encountered a significant setback.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has put the deal on hold, citing the proposed new owners’ lack of qualifications to manage the assets.
In January 2024, Shell International PLC announced its decision to exit the Nigerian onshore oil market by selling its subsidiary, Shell Petroleum Development Company Ltd (SPDC), in order to focus on more profitable deep offshore fields.
The company stated that the transaction would involve the transfer of operations, which include 15 oil mining leases for onshore petroleum and three for shallow water operations, to the new owners pending completion of the sale.
Shell emphasized that the transaction was designed to preserve SPDC’s operational capabilities, including its technical expertise, management systems, and processes implemented on behalf of all companies in the SPDC Joint Venture (SPDC JV).
SPDC’s employees will remain with the company during the transition to new ownership. Following the completion of the sale, Shell will continue to support the management of SPDC JV facilities, which supply a significant portion of the feed gas to Nigeria LNG (NLNG), ensuring Nigeria maximizes its value from LNG operations.
However, Shell noted that the completion of the transaction is contingent upon approvals from the Federal Government of Nigeria, the oil regulators, and other stipulated conditions.
The Renaissance Group, a consortium of five companies that includes four Nigerian exploration and production firms and one international energy group—ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin—was identified as the potential new owner.
In September 2024, NUPRC dismissed reports claiming that it had approved the deal. The regulatory body advised stakeholders to disregard such claims and promised to clarify its stance on the transaction at the appropriate time.
A recent report from Thisday confirmed that the deal will not proceed, as the regulatory body insisted that the consortium lacked the capacity to manage the assets effectively.
“The report that Shell/Renaissance is still in the waiting room is inaccurate. The authorities have made a decision, which has been communicated to the parties involved,” a source told Thisday.
“The bid was rejected because the consortium failed to demonstrate sufficient capability to manage 18 oil wells.”
According to Reuters, SPDC is currently providing the necessary details to the regulator to advance the approval process, while ongoing discussions with the government continue as part of the sale’s approval requirements.
