Nigeria has blocked Shell’s sale of its entire onshore and shallow-water oil operations, but approved a similar deal by Exxon Mobil, Nigeria Upstream Petroleum Regulatory Commission said on Monday.
Shell’s asset sale for up to $2.4 billion to Renaissance consortium, comprising five companies, was first announced in January.
Exxon’s deal with Seplat Energy has awaited regulatory approval for more than two years since a $1.28 billion fee was announced in February 2022.
In a speech at an event in Abuja, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) CEO Gbenga Komolafe said the Shell deal “could not scale (the) regulatory test,” but did not elaborate. Exxon’s transaction was granted ministerial approval.
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President Bola Tinubu had signalled on Oct. 1 that the Exxon-Seplat deal would receive ministerial approval in a matter of days after getting clearance from the regulator. “We welcome the regulator’s announcement and look forward to formally receiving the ministerial consent as we work toward the conclusion of the sale,” Exxon said in a statement.
A Shell spokesperson did not immediately respond to a request for comment. The rejection is a blow to Shell’s strategy to pivot toward deepwater for future investments and reflects the growing challenges that oil companies face in Nigeria.
Oil majors operating in Nigeria, Africa’s largest oil exporter, have been retreating from onshore operations hampered by theft and sabotage, opting to focus future investments on newer and more lucrative deep offshore fields.
The Shell assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of associated and non-associated gas.
Under Exxon’s deal, Seplat will own 40% of four oil mining leases and associated infrastructure, including the Qua Iboe export terminal, and 51% of the Bonny River natural gas liquids recovery plant previously owned by Mobil Producing Nigeria Unlimited, Exxon’s local unit.
In trying to exit the oil-rich Niger Delta, Shell followed Exxon Mobil, TotalEnergies who wanted to do so due to security concerns.
NUPRC approved the sale of onshore assets by Eni’s local unit to Oando in July and another from Equinor to new entrant Project Odinmim. Environmental activists and some communities opposed the Shell-Renaissance deal, tying Shell to a string of lawsuits for environmental restoration and compensation for land and rivers damaged by oil spills.
In April, NUPRC started evaluating Shell’s divestment to the consortium, which comprises four Nigerian exploration and production companies and an international energy group.
Komolafe at the commission’s launch of the Project 1 million barrels of oil per day (mmbpd) initiative, said, “Currently, we have processed four of the transactions and four of them have received ministerial consent.
“The four transactions are the transactions in respect of Equinor–Project Odinmim. That has been recommended by the regulator in line with the provisions of the Petroleum Industry Act and it has received ministerial consent.
“Also, the transaction in respect of Agip to Oando that has equally been processed in line with the established regulatory pillars and that has equally received ministerial consent and that has been communicated accordingly.
“In the same vein, a transaction in respect to ExxonMobil-Seplat has equally successfully been recommended by the regulator and I am happy to announce that it has received ministerial consent.
“Also, a transaction in respect of 10 per cent divestment by TotalEnergies (to Telema Energies) has equally been completed by the regulator and has received ministerial consent.
Komolafe further announced that oil production has now increased from 1.2 million to 1.6 million barrels, adding that although it is far short of the presidential directive, the commission is working together with stakeholders to improve production.
Also speaking, the Group Chief Executive Officer of NNPCL, Mele Kyari, noted that one of the challenges of Nigeria’s upstream sector is integrity and outdated infrastructure, adding that the company is working hard with NUPRC to correct the challenges.
President Bola Ahmed Tinubu, who was represented by the Secretary to the Government of the Federation, George Akume, noted that the federal government is closely working with legislators to implement reforms in the oil and gas sector as part of efforts to grow the industry, increase production and enhance domestic energy security.
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