Nigeria approves Shell's watershed exit from oil-rich Niger Delta

Shell’s landmark divestment deal with a Nigerian consortium has secured vital government approval, the company confirmed to S&P Global Commodity Insights Dec. 18, setting its exit from the troubled Niger Delta in motion.

The energy major, which was an early pioneer of Nigeria’s oil and gas sector, agreed in January to sell its entire onshore and shallow water business to Renaissance, a cluster of five mostly local companies, for $2.4 billion.

It was the highest profile of a slew of divestments by majors including Eni, ExxonMobil, Equinor and TotalEnergies from the Delta after years of sabotage, crude theft and spills. The deals have faced official opposition and legal challenges.

On Dec. 18, however, Nigeria's government gave consent to the deal. Sources said the approval had come from President Bola Tinubu, who is officially the country’s oil minister, rather than minister of state for oil Heineken Lokpobiri, and was communicated through the country's upstream regulator.

“Shell has received notification conveying the minister’s consent for the sale of the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance,” a Shell spokesperson told Commodity Insights. “We are assessing this and will provide an update in due course.”

Renaissance also confirmed the official consent in a statement. The consortium said the approval “marks a significant step forward from the announcement of the sale and purchase agreements in January".

SPDC holds a 30% stake in 15 onshore oil and gas licenses and three in shallow water in Nigeria.

The consequential approval comes just two months after the Nigerian Upstream Petroleum Regulatory Commission said it had decided against approving the deal. Representatives from Nigeria’s oil ministry and the NUPRC could not immediately be reached for comment.

It also comes two days after Shell took a final investment decision on its huge Bonga North expansion in the deepwater, which is increasingly preferred by IOCs because of its lower risk profile. Shell and its partners are expected to spend $5 billion on the development, according to the Nigerian government.

Sabotage, theft and underinvestment in the Niger Delta have hit production in recent years. The country produced 1.47 million b/d of crude in November, according to the Platts OPEC Survey from Commodity Insights, well below its 2.2 million b/d capacity.

Local firms buying IOC assets, including Oando, Renaissance and Seplat, insist the deals will help boost production from mature fields.