Serrari Group

In a strategic move to streamline its portfolio and exit onshore oil production in the Niger Delta, Shell has entered into a $2.4 billion agreement to divest its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance, a consortium of five companies.

Under the terms of the deal, Shell will receive an upfront payment of $1.3 billion, with an additional payment of up to $1.1 billion covering prior receivables upon completion. Importantly, Shell will retain involvement in supporting the management of SPDC JV facilities post-transaction, ensuring continuity in supplying a significant portion of feed gas to Nigeria LNG (NLNG).

SPDC Limited, maintaining a 30% stake, will continue as the operator of 18 onshore and shallow water mining leases within the joint venture. This venture comprises SPDC Ltd (30%), Nigerian National Petroleum Corporation (55%), Total Exploration and Production Nigeria Ltd (10%), and Nigeria Agip Oil Company Ltd (5%).

Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, remarked, “This agreement marks an important milestone for Shell in Nigeria, aligning with our intent to exit onshore oil production in the Niger Delta. It enables us to focus our future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions.”

Renaissance, formed by ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, brings a diverse blend of local and international expertise to the acquisition, promising a smooth transition and sustained operational success for SPDC assets.

Crucially, Shell’s decision to divest its onshore subsidiary does not affect its other key businesses in Nigeria. Operations will continue through Shell Nigeria Exploration and Production Company Limited (SNEPCo) in the deepwater Gulf of Guinea, Shell Nigeria Gas Limited (SNG) providing gas to domestic industrial and commercial customers, and Daystar Power Group offering integrated solar power solutions across West Africa.

The completion of this transaction signifies a strategic realignment for Shell, consolidating its focus on Deepwater and Integrated Gas positions in Nigeria and shaping the country’s energy landscape for sustainable growth.

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By: Montel Kamau
Serrari Financial Analyst
17th January, 2024

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