Shell, the British energy major, has announced its plans to exit Nigeria’s onshore oil operations after nearly a century of activity. The company revealed on Tuesday that it would be selling The Shell Petroleum Development Corporation of Nigeria Limited (SPDC Limited) to Renaissance, a consortium consisting primarily of local companies. The deal includes an initial consideration of $1.3 billion, with an additional payment of up to $1.1 billion to be made upon completion.
Shell has been involved in Nigeria since the 1930s, but has faced significant challenges in recent years. The company has dealt with numerous oil spills at its onshore operations, mainly due to theft, sabotage, and operational issues. These incidents have resulted in costly repairs and high-profile lawsuits. As part of the deal, Renaissance will assume responsibility for addressing spills, theft, and sabotage. However, Nnimmo Bassey, the Executive Director of Nigerian advocacy group Health of Mother Earth Foundation, insists that Shell must fully acknowledge its responsibility. Bassey argues that the company should pay for the remediation and restoration of polluted areas and provide reparations to the affected communities, emphasizing that they cannot simply walk away from the damage they have caused.
SPDC Limited operates and holds a 30% stake in the SPDC joint venture, which holds 18 onshore and shallow mining leases. By the end of 2022, Shell’s resources in SPDC reached approximately 458 million barrels of oil equivalent. The sale to Renaissance is subject to approval by the Nigerian government. Shell will continue to operate in Nigeria’s offshore sector, which is more profitable and poses fewer problems.
The departure from Nigeria’s onshore oil operations is part of a broader trend of western energy companies retreating from the country as they focus on newer and more lucrative operations elsewhere. Over the past few years, Exxon Mobil, Italy’s Eni, and Norway’s Equinor have all made deals to sell assets in Nigeria.
Shell’s decision to exit Nigeria’s onshore oil after such a lengthy presence in the country marks a significant development. The impact of the company’s activities and the responsibility it bears for the environmental damage caused by oil spills will continue to be subjects of significant public scrutiny. As the sale to Renaissance awaits government approval, the future of Nigeria’s onshore oil operations hangs in the balance.
