A consortium of top oil companies, including Waltersmith Group led by Nigerian businessman Abdulrazaq Isa, has finalised an agreement to acquire Shell’s onshore oil business in Nigeria for $2 billion. The deal marks a shift in the Nigerian oil industry, signifying Shell’s planned withdrawal from the challenging operating environment in the Niger Delta area.
Shell to receive initial payment of $1.1billion
According to the reports, the deal aligns with Shell’s long-term goals to exit onshore activities in Nigeria, which is plagued by security issues, environmental concerns, and community restiveness.
Shell is set to receive an initial payment of $1.3 billion, with a potential additional fee of about $1.1 billion contingent on future developments, bringing the total potential value of the bill of the transactions to $2.4 billion.
The alliances behind the consortium
The consortium, named Renaissance, represents a mix of notable players in the Nigerian oil industry. Abdulrazaq Isa, the Chairman of Waltersmith Group, brings extensive experience in oil exploration and production in Nigeria. Other consortium members, including ND Western, First E&P, and Aradel Energy, have substantial positions in the local market. Gabonese oil tycoon Samuel Dossou-Aworet brings international flare and financial muscle to the group.
Environmental issues and unrests force Shell out of business
Shell plans to redirect its investments in Nigeria towards deepwater and integrated gas ventures and areas it considers vital and financially viable. A statement by Shell’s Integrated Gas and Upstream Director, Zoe Yujnovich, stressed the deal’s role in facilitating Shell’s portfolio and enabling disciplined investment in critical areas. The deal faced severe challenges. In 2022, a court ruling temporarily halted the divestment plans due to the ongoing litigation related to pollution allegations. The transaction is expected to close in the coming months, subject to approval by the Nigerian government.
Nigeria agrees to allow deal to proceed
The development comes as the Nigerian government revealed that it will grant speedy approval to the deal if the necessary documentation is done. The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, emphasized that the government will not restrict legitimate business transactions in the oil and gas industry.
He said: “On the part of the government, once we get the necessary documents, we will not waste time to give the necessary considerations and consent.”
He affirmed the Nigerian government’s commitment to fostering a business-friendly environment in the oil and gas sector.
Shell breaks silence on reported plans to leave Nigeria
It was reported that Shell Petroleum Development Company of Nigeria has reacted to its rumoured plan to leave Nigeria after selling its onshore business. Shell announced it had reached an agreement with Renaissance Africa Energy to take over its oil business in Niger Delta, the report said. The announcement triggered reactions on various social media platforms, with many Nigerians expressing the opinion that Shell was leaving the country after active service since 1937.
