The London-based energy giant has faced decades of domestic criticism over the environmental impact of oil exploration in Nigeria.
Shell has agreed to sell its onshore business in Nigeria’s Niger Delta to a consortium of companies in a deal worth $2.4 billion (€2.2 billion), the latest move by the energy company to limit its influence in the West African nation amid lingering grievances. environmental pollution caused by the oil industry.
Shell called it a way to streamline its business in the country, where it has operated for decades, facing oil spills that have polluted rivers and farms and fueled tensions in a region plagued by years of armed violence.
“This agreement marks an important milestone for Shell in Nigeria in line with our intention to exit onshore oil production in the Niger Delta,” Zoe Yujnovich, Shell’s director of integrated gas and upstream, said in a statement. This will help “simplify our portfolio and focus future disciplined investments in Nigeria on our deepwater and integrated gas position”.
The buyer consortium is Renaissance, which includes ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin, Shell said. After an initial payment of $1.3 billion, the London-based energy giant said it would receive an additional $1.1 billion.
The assets sold by Shell are mainly owned by the Nigerian government’s national oil company NNPC, which has a 55% stake. The government must give its approval to finalize the deal. Shell manages the assets and owns a 30% stake, with the remaining 10% owned by France’s TotalEnergies and 5% by Italy’s Eni.
The assets include 15 onshore mining leases and three shallow water operations, the company said.
Activists in the Niger Delta, where Shell has faced decades of local criticism of its oil exploration, plan to ask the government to withhold its approval unless the company reverses the damage it has caused to the environment.
“It will be a very serious concern if the obvious legacy issues, especially the environment and decommissioning issues, are not adequately and transparently addressed,” said veteran environmental activist and former president Ledum Mitee. Movement for the survival of the Ogoni people.
Nigeria is highly dependent on the oil reserves of the Niger Delta for its income. However, pollution from oil and natural gas production has prevented residents from accessing clean water, harmed agriculture and fisheries, and increased tensions.
Militants took advantage of the situation and at one point almost brought the oil industry to a standstill, kidnapping foreign nationals for ransom and attacking facilities before the government’s amnesty package.
Despite joint military operations and a government aid program for ex-combatants accompanying the amnesty deal, the Niger Delta remains volatile. The oil industry faces risks of violence, including pipeline vandalism by oil thieves, whom companies blame for oil spills.
Fyneface Dumnamene, director of the Center for Youth and Environment, called on the Nigerian government to require Shell and the new buyers to submit a plan to address environmental damage and compensate communities before giving approval.
Shell said in a statement to the AP that the sale is intended to preserve the company’s role “as operator of the joint venture where spills may have occurred in the past during the operations of the joint venture.”
If the transaction is approved, Shell will still have at least three subsidiary operations in Nigeria, namely deepwater operations in the Gulf of Guinea, an industrial gas business and solar energy for industrial activities.
All are separately incorporated subsidiaries and are outside the scope of the transaction with Renaissance, Shell said.