British multinational oil and gas company Shell has decided to sell The Shell Petroleum Development Company of Nigeria Limited (SPDC) to a consortium comprising mostly local energy players.
- •The Shell subsidiary owns onshore oil assets in Nigeria’s Niger Delta region.
- •The purchasing consortium includes ND Western, Aradel Holdings Plc, First E&P, the Waltersmith Group, Petroleum Development Company Limited and Petrolin.
- •The transaction is measured at $1.3 billion, with further payments of up to $1.1 billion set to be made.
The SPDC operates and supplies onshore and shallow water oil and gas to domestic and export markets. While Shell has been in operation in Nigeria since the 1930s, SPDC was formed in 1979. The company reached 458 million barrels of oil in 2022, according to a report by 2022.
The transaction allows the British multinational to focus its attention on other critical assets within its portfolio. The company is looking at increasing investments in the Bongo and Erha fields – where nearly one-third of the country’s deepwater production is derived.
- •The company currently supplies about 10% of Nigeria’s domestic natural gas as well as operates a network of 3,173 km of flow-lines and pipelines.
- •SPDC also has 263 producing oil wells, 56 producing gas wells, six gas plants, two major oil export terminals and one power plant.
- •All of these assets are held through its Joint Venture with the Nigerian National Petroleum Corporation, TotalEnergies and the Nigerian Agip Oil Company.
“This agreement marks an important milestone for Shell in Nigeria,” Shell’s Integrated Gas and Upstream Director Zoe Yujnovich, explained, adding that the deal is “simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions.”
“Local Nigerian companies will lead the next phase of the country’s energy industry transformation and we look forward to the success the consortium will have in the onshore market,” NJ Ayuk, Executive Chairman of the African Energy Chamber said.
The deal is now awaiting government approval.
The Bigger Picture
As multinationals retreat from Nigeria’s oil sector, local players are entering into deals to either take over their assets or investing in Greenfield projects. Other multinationals that have exited Nigeria include Exxon Mobil, which sold its four oilfields to a local producer for $1.28bn in 2022.
- •Like its competitor Shell, Exxon Mobil had been operating in the West African country since the pre-independence era.
- •While such companies made billions of dollars over the decades, they have also faced multiple lawsuits, as well as spills, theft, and outright criminality.
- •The ongoing divestments are part of an organised retreat by the multinationals, whose risk appetite has waned over the last decade.
In their place, local players have upped investments and acquisitions. In addition to the acquisitions of licences, local players are now also hoping that the ongoing start of operations by Dangote Refinery, which has so far received six million barrels of oil, will fix the glaring gap in the supply chain.
