The Nigerian government on December 18, 2024 granted ministerial consent for the sale of Shell Petroleum Development Company's onshore assets to Renaissance Africa Energy Company Limited, a local oil and gas consortium.
This decision has sparked considerable controversy and opposition from various stakeholders, including Global Gas and Refining Limited, an indigenous gas firm.
The approval, which was announced by the Minister of State for Petroleum Resources, Heineken Lokpobiri, marks a pivotal moment in Nigeria's energy sector, as it involves a substantial $2.4 billion transaction.
The deal, initially announced in January 2024, had faced regulatory hurdles earlier in the year. The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) had previously rejected the transaction in October, citing its inability to pass the necessary regulatory tests.
NUPRC's CEO, Gbenga Komolafe, emphasized that the commission would only approve the sale if Shell addressed outstanding issues related to oil spills and committed to funding cleanup efforts in the Niger Delta region. These environmental concerns have been a longstanding issue, with numerous lawsuits and allegations of human rights abuses and environmental degradation hanging over Shell Nigeria.
Despite these challenges, Renaissance Africa Energy Company Limited expressed satisfaction with the recent approval, stating that it represents a pivotal step forward from the initial Sale and Purchase Agreements announced in January.
The consortium, formed by ND Western, Aradel Energy, First Exploration & Production, Waltersmith, and Petrolin, is poised to acquire assets estimated to hold 6.73 billion barrels of oil and condensate, along with 56.27 trillion cubic feet of associated and non-associated gas.
However, the approval has not been without its detractors. Global Gas and Refining Limited has publicly condemned the government's decision, arguing that it disregards the concerns of smaller companies and host communities affected by Shell's operations.
The firm criticized Shell for proceeding with the deal while ignoring existing issues raised by these stakeholders. This sentiment echoes broader discontent within the Niger Delta region, where communities have long protested against the environmental impact of oil extraction activities.
The controversy surrounding the divestment is further compounded by the broader trend of Western energy companies retreating from Nigeria. Shell's exit is part of this larger movement, as companies like Exxon Mobil, Italy's Eni, and Norway's Equinor have also struck deals to sell their assets in the country in recent years. These companies are shifting their focus to newer, more profitable operations elsewhere, leaving behind a complex legacy of environmental and social challenges in Nigeria.
In response to the approval, President Bola Tinubu, who also serves as the Minister of Petroleum Resources, has been urged to ensure that the transaction addresses the outstanding environmental and social issues. His special adviser on energy, Olu Verheijen, indicated that the government is working towards resolving the concerns surrounding Shell's proposed sale to Renaissance.
The divestment is part of a series of asset sales approved by the Nigerian government, including transactions involving Mobil Producing Nigeria Unlimited, Equinor Nigeria Energy Company Limited, TotalEnergies EP Nigeria Limited, and the Nigerian Agip Oil Company Limited. These moves reflect a broader strategy to restructure the country's oil and gas sector, attract new investments, and address longstanding grievances related to resource management and environmental stewardship.
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