Nigeria’s oil regulator has rejected Shell’s proposed $1.3 billion sale of its onshore oilfields to Renaissance Group, citing concerns over the buyer’s qualifications to manage the assets, according to a report by ThisDay newspaper.
Shell, which owns the assets through Shell Petroleum Development Company (SPDC), responded by stating it is providing all necessary information to the regulator but did not directly confirm the report.
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) declined to approve the sale, arguing that the Renaissance consortium failed to demonstrate its ability to manage the assets.
The companies making up the group have reportedly struggled to operate at least 50% of the assets they currently control, according to sources cited by ThisDay.
“Shell and the government are in ongoing communication as part of the approval process for the sale of SPDC. SPDC will continue to provide the regulator with all information needed to complete the approval process,” a Shell spokesperson told Reuters.
The NUPRC has communicated its decision to all parties involved, according to the report. Neither the regulator nor Renaissance has issued an official comment on the rejection.
Shell had announced its decision to exit Nigeria’s onshore and shallow water operations earlier this year, opting instead to focus on deep offshore fields, which are seen as more profitable.
The proposed sale to Renaissance was part of a broader trend, with other major oil companies like Exxon Mobil, Eni, and TotalEnergies also divesting from onshore assets in Nigeria in recent years.
Clean-up
In May, after delays, the regulator told major oil and gas companies seeking to leave the heavily polluted Niger Delta a deal: carry out voluntary clean-up and pay communities in exchange for a speedy divestment.
The offer meant majors that aimed to exit Nigeria’s onshore oil could get quicker approval to do so if they take responsibility for spills rather than wait for authorities to apportion blame, the regulator said on Friday.
In the last four years, ExxonMobil, Shell, TotalEnergies, and Eni have announced plans to leave offshore fields in the Niger Delta after decades of operations that have devastated the environment and impacted local communities.
Since then, only Eni’s sale to Oando Ltd. has gone through. President Bola Tinubu later authorised the ExxonMobil deal be quickened.
The companies attribute their exit to security concerns like theft and sabotage, as well as a shift towards cleaner energy. However, analysts suggest that recent legal victories for affected communities suing these companies in European courts may also be a contributing factor, as it makes clear there will be greater accountability.
A new petroleum industry law enacted in 2021 requires oil companies abandoning their assets to set up a “decommissioning fund.”
The companies’ exits have been delayed by regulatory hurdles. The NUPRC in May cited the requirement for setting aside money for decommissioning, host community development and environmental remediation.
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