Shell to get rid of Nigeria onshore oil operation for $2.4 billion: summary

What we know

• The Shell Petroleum Development Company of Nigeria (SPDC), a branch of London-based oil company Shell Plc announced on January 16 that they had agreed to a transaction with a consortium of five companies paving the way for the latter to purchase its onshore operations in Nigeria.
• The consortium of five companies consists of one multinational energy group and four Nigerian exploration and production companies.
• In Nigeria, the SPDC Joint Venture owns 15 oil mining leases for onshore activities and three for shallow water operations.
• As part of the deal, SPDC will get an initial payment of $1.3 billion, with up to $1.1 billion in further cash payments related to previous receivables and cash balances in the company. The majority of these payments are expected to be made at the end of the transaction.
• The oil and gas giant will focus investment on Deepwater and Integrated Gas positions.
• Shell has operated in the oil and gas industry in Nigeria since the 1930s. The company has suffered for years with hundreds of onshore oil spills, which have resulted in expensive repairs and high-profile legal actions.

What they said

“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas position. It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium. Shell sees a bright future in Nigeria with a positive investment outlook for its energy sector. We will continue to support the country’s growing energy needs and export ambitions in areas aligned with our strategy,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.