The Nigerian government has rejected Shell’s proposed sale of its onshore oil business in the country, dealing a significant blow to the energy giant’s plans to exit the sector.
The divestment, aimed at selling its Nigerian onshore assets to Renaissance Africa Energy Company Limited, failed to meet regulatory requirements.
Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed the decision during the launch of the “Project One Million Barrels of Oil Per Day” initiative in Abuja on Monday.
He explained that Shell’s deal, despite years of negotiation and a pending $2.4 billion transaction, “could not scale the regulatory test.”
“In total, five divestment applications were submitted for approval. While four passed and secured ministerial consent, Shell’s proposal to transfer its assets to Renaissance Africa Energy Company Limited was rejected,” Komolafe said.
Shell had initially struck a deal in January with a consortium of companies, paving the way for the sale of its onshore business.
The transaction was to provide Shell Petroleum Development Company (SPDC) with $1.3 billion upfront and an additional $1.1 billion upon consummation of the deal.
The sale came after Shell faced increasing challenges, including sabotage, theft, and environmental liabilities.
“This sale was a relief for Shell, as the company has been seeking to offload these assets since 2021,” said Komolafe.
However, Nigeria’s commitment to protecting its national interest trumped the transaction.
“The government remains committed to free entry and exit in business transactions, but such moves must align with national priorities,” he added.
Komolafe also noted that the country is committed to upholding the principles of fair business practice, in line with President Bola Tinubu’s vision.
“Nigeria fully supports the philosophy of free market operations as reiterated by our dear President in his recent Independence Day speech.
The NUPRC is guided by seven regulatory pillars in the upstream oil sector to ensure sanity and protect national interests.”
Despite the setback, Shell remains firm in its stance that it is not leaving Nigeria. Last week, Osagie Okunbor, Managing Director of SPDC, clarified that the company is merely shifting its portfolio to deep offshore investments.
“We are not exiting Nigeria. Instead, we are focusing more on the deepwater where our technological and financial capabilities provide a significant advantage,” he said at the Nigerian Economic Summit.
As the government continues to oversee the divestment process in the oil sector, Shell’s future strategy appears geared towards capitalising on offshore ventures, distancing itself from the challenges plaguing its onshore operations.
