Nigeria (Commonwealth) _The UK-based supermajor Shell announced on Tuesday that it will continue to be a significant investor in Nigeria’s energy industry through its deepwater and Integrated Gas operations, but it would be leaving the country’s onshore oil and gas after agreeing to sell its onshore assets in the biggest African OPEC producer.
For US$1.3 billion, Shell has agreed to sell The Shell Petroleum Development Company of Nigeria Limited (SPDC), its onshore Nigerian subsidiary, to Renaissance, a group of five businesses that includes an international energy group and four Nigerian exploration and production companies.
The buyer would also pay up to US$1.1 billion in additional cash to Shell, mostly for previous receivables and cash balances in the company. The supermajor stated in a statement that the majority of these payments are anticipated to be made at the close of the transaction.
The permission of the Nigerian federal government and other requirements must be met for the transaction to be completed.
According to Shell’s Integrated Gas and Upstream Director Zoë Yujnovich, “This agreement marks an important milestone for Shell in Nigeria. It aligns with our previously announced intent to exit onshore oil production in the Niger Delta, simplify our portfolio, and focus future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions.”
Shell believes that Nigeria has a promising future and that its energy industry will attract foreign investment. In sectors that are in line with our plan, we will keep assisting the nation in meeting its expanding energy demands and export goals, Yujnovich continued.
For many years, Shell has had difficulties in operating its onshore business in Nigeria. Notably, the company has faced several lawsuits from local populations in the past due to oil spills. The supermajor argues that criminal activity and oil theft are the main causes of pollution, yet he refuses to take accountability for such spills. According to Shell, most leaks in the most recent claims from communities that the London High Court authorized to go on with at the end of last year were caused by theft.
Shell has made a historic decision to sell its onshore oil production activities in Nigeria. This decision is consistent with a growing trend among global corporations to reevaluate their presence in areas riven by political unrest and environmental issues. The buyer and the financial conditions of the agreement are among the details that have not yet been made public.
The sale is representative of a larger trend in the business practices of multinational oil corporations, many of which are reassessing their involvement in regions that are rife with conflicts between communities, environmental concerns, and security risks. These problems have been concentrated on the Niger Delta in particular, which has caused a slow exodus of foreign capital from the oil industry.
The decision made by Shell and other similar actions by other businesses signal a dramatic change in the decades-long dominance of foreign investors in Nigeria’s oil sector. The sector may realign as a result of these companies leaving, which might have an impact on the geopolitics and economy of the country.
This trend is also consistent with the current worldwide review of fossil fuel investments in light of heightened environmental scrutiny. Businesses are being held more and more responsible for the environmental effects they cause, which has increased attention to renewable energy sources. This change is altering the mindset of multinational organizations as well as the global energy environment.
The common term for Shell plc’s activities in Nigeria, which are managed by four companies, the main one being Shell Petroleum Development Company of Nigeria Limited (SPDC), is Shell Nigeria.Over twenty-one percent of Nigeria’s total petroleum output (629,000 barrels per day, or 100,000 m3/d) in 2009) comes from joint ventures owned by Royal Dutch Shell.
The corporation has generated controversy in the Niger Delta because of its bad environmental record and the fact that local populations have not profited financially from the majority of oil exploitation’s profits. Specifically, when the Movement for the Survival of the Ogoni People (MOSOP) planned massive demonstrations against Shell and the government in 1993, it resulted in the local community being repressed.
The business has been found culpable for environmental damage by Nigerian and European courts, and it has caused many large oil spills in the Niger Delta. One of the biggest incidents happened at an oil extraction facility owned by Shell in the Ejama-Ebubu neighborhood.
