The Federal Government of Nigeria has reportedly approved the sale of onshore assets of the Shell Petroleum Development Company (SPDC) to Renaissance Africa Energy Company Limited, a local oil and gas consortium,
Reuters reported that the approval was announced by Renaissance in a statement on Wednesday.
Renaissance stated in the statement that “this approval marks a significant step forward from the announcement of the sale and purchase agreements in January”.
The approval was reportedly given by the Minister of State for Petroleum Resources, Heineken Lokpobiri.
According to Africa Report, Shell’s $5bn investment in the Bonga North project was instrumental in persuading the government to approve the sale of the onshore asset which was initially agreed at $1.3bn.
Backstory
Nairametrics reported that the sale was blocked by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in October, even though both SPDC and the Renaissance had reached an agreement in January.
- The assets are said to hold an estimated 6.73 billion barrels of oil and condensate, along with 56.27 trillion cubic feet of associated and non-associated gas.
- NUPRC’s CEO, Gbenga Komolafe said the commission rejected the deal because it “could not scale (the) regulatory test”
- There are also concerns about numerous lawsuits and allegations hanging over Shell Nigeria over human rights abuses and environmental degradation in the Niger Delta region.
- NUPRC said that it would only grant approval for the sale if Shell takes responsibility for oil spills and agrees to fund cleanup efforts in the Niger Delta.
What you should know
Shell Plc reached an agreement to sell its Nigerian onshore oil assets to Renaissance Group, a local consortium.
- Renaissance Group is a conglomerate of local oil companies including ND Western Ltd., Aradel Holdings Plc, Petrolin Group, FIRS Exploration and Petroleum Development Co. and Waltersmith Group.
- The deal was blocked by the upstream regulatory agency, NUPRC in October.
- NUPRC said it wanted Shell to show responsibility for oil spills that harmed lives and the environment and commit to cleanup efforts.
- Oil companies, including Shell, Total Energy and Eni are divesting offshore operations and leaving onshore operations.
- This is so because they are avoiding dealing with local communities who bear the cost of oil spills and environmental damages. These companies also had to confront such issues as oil theft and pipeline vandalism.