The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has confirmed the blockage of the $1.3 billion sale of Shell’s assets to Renaissance Group due to regulatory issues.
NUPRC’s CEO, Gbenga Komolafe, confirmed the development to Reuters in Abuja on Monday.
The assets in question hold an estimated 6.73 billion barrels of oil and condensate, along with 56.27 trillion cubic feet of associated and non-associated gas.
Komolafe stated that the deal “could not scale (the) regulatory test,” without providing further details.
In addition, environmental activists and some communities opposed the Shell-Renaissance deal, tying Shell into a string of lawsuits for environmental restoration and compensation for land and rivers damaged by historical oil spills.
Backstory
Nairametrics reported in January that Shell Plc had reached an agreement to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion, subject to government approval.
Zoe Yujnovich, Shell’s Integrated Gas and Upstream Director, confirmed the deal, highlighting it as a crucial step in the company’s strategy to streamline operations and focus on deepwater and integrated gas projects in Nigeria.
However, the upstream oil regulator, NUPRC, has stated that it will expedite approval only if Shell takes responsibility for oil spills and agrees to fund cleanup efforts in the Niger Delta.
NUPRC Chief Executive, Gbenga Komolafe, explained that Shell’s compliance with these terms would allow for a faster approval process. Alternatively, a longer approval route would involve waiting until the NUPRC identifies and assigns all liabilities, Komolafe added.
Meanwhile, host community residents have filed a N500 billion claim against Shell Petroleum Development Company, accusing it of violating a “Mareva” injunction and seeking to halt the sale of its onshore assets.
What You Should Know
International oil companies (IOCs) are scaling back their operations in Nigeria due to challenges that have affected the profitability and sustainability of their ventures, with oil theft in the Niger Delta being a major issue.
- The Niger Delta, known for its rich oil reserves, has been troubled by pipeline sabotage and theft, resulting in severe revenue losses and environmental damage.
- TotalEnergies CEO Patrick Pouyanne disclosed that the company has not engaged in oil exploration in the area for 12 years due to persistent insecurity.
- In response to these challenges, companies like Shell Plc and ExxonMobil are adopting divestment strategies, shifting focus to deepwater operations that offer fewer risks and more stable business environments.