British multinational oil and gas company Shell Plc. has perfected plans to sell its Nigerian onshore oil business to a group of local companies for about $1.3 billion.
The deal would fulfil Shell’s long-term goal of exiting from a challenging operating environment in the Niger Delta region. It will retain a presence in other parts of the country. Beyond the initial deal, Shell said it will receive additional cash payments of as much as $1.1 billion on completion.
“This agreement marks an important milestone for Shell in Nigeria,” Zoe Yujnovich, integrated gas and upstream director, said in a statement on Tuesday. The deal is “simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions”
According to the statement, the buyer, known as Renaissance, is made up of exploration and production companies First E&P, Waltersmith, Petrolin, ND Western, and Aradel Energy, all of which are based in Nigeria,
The statement comes following a strenuous sales process halted in 2022 after a court ruling ordered Shell Petroleum Development Company of Nigeria Ltd. to pause its divestment plans pending the outcome of a court case related to allegations of environmental pollution. Earlier this month, Nigeria’s Supreme Court upheld Shell’s appeal against this ruling.
Shell has explored oil in Nigeria for more than half a century. However, three years ago then-Chief Executive Officer Ben van Beurden signalled the company’s plam to leave its onshore oil positions. These operations have become increasingly taxing, with accusations of environmental pollution by local communities, as well as persistent oil theft that caused damage to machinery.
With the sale of its assets, Shell will continue to operate in the country through its deep-water oil business, Shell Nigeria Exploration and Production Company Ltd.
Another unit that provides gas to domestic industrial and commercial customers, Shell Nigeria Gas Ltd., will continue operating as will solar firm Daystar Power Group. Shell retains its 25.6% stake in Nigeria LNG, which produces and exports liquefied natural gas.