Hart Energy Staff
Comments

Shell PLC is selling its Nigerian onshore business for $1.3 billion — with potentially more than $1 billion in additional payments — as the European major prioritizes investment in deepwater and integrated gas.

Shell agreed to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Co. of Nigeria Limited (SPDC), to energy consortium Renaissance, the company announced Jan. 16.

Renaissance is comprised of four E&P companies based in Nigeria—ND Western, Aradel Energy, First E&P, Waltersmith—and Petrolin, an international energy group.

Renaissance will also make up to $1.1 billion in additional payments to Shell, primarily relating to prior receivables and cash balances in the Nigerian onshore business. The majority of the balance is expected to be paid at closing.

The net book value of SPDC was approximately $2.8 billion as of Dec. 31, 2023.

The transaction remains subject to approvals by the Nigerian government and other closing conditions.

“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions,” Zoë Yujnovich, Shell’s integrated gas and upstream director, said in a news release.

The SPDC joint venture (JV) holds 15 leases for onshore petroleum mining operations and three for operations in shallow water offshore Nigeria.

Proved reserves subject to the transaction were approximately 458 MMboe as of Dec. 31, 2022, per the announcement.

Shell has three other main businesses in Nigeria that are outside the scope of the onshore transaction:

  • Shell Nigeria Exploration and Production Co. Ltd. (SNEPCo) produces in the deepwater Gulf of Guinea;
  • Shell Nigeria Gas Ltd., which provides gas to industrial and commercial customers in Nigeria; and
  • Daystar Power Group, which provides solar power to commercial and industrial customers in West Africa.

Shell will retain a role in supporting the SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG—an LNG export project in which Shell will continue to hold a 25.6% ownership stake.

“Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium,” Yujnovich said.

RELATED: Report: Nigeria Production to Ramp up through 2030

Comments