Shell to Sell Its Onshore Nigeria Oil Business for $1.3 Billion

Shell said Tuesday that it had agreed to sell its onshore oil and gas business in Nigeria to a group dominated by local companies for $1.3 billion.

The transaction is an effort by Europe’s largest energy company to reduce its risks in the country that is Africa’s largest oil producer. Nigeria has long been a cornerstone for Shell, but also the source of a damaging legal and environmental legacy.

Specifically, Shell said it would sell its Nigerian subsidiary, which owns 30 percent of a joint venture that operates a vast maze of wells and pipelines and other installations in the swampy Niger Delta. Other partners in the joint venture include Nigeria’s state oil company, which has a 55 percent stake, and France’s TotalEnergies.

Shell will continue its offshore energy drilling in Nigeria, as well as its liquefied natural gas operations there.

Shell has long been considered the most important energy producer in Nigeria, and so its willingness to dispose of a longstanding business could add to doubts about the country’s future as an oil and gas producer.

Over the last decade, Nigeria’s oil production has declined by about 40 percent because of lack of investment and management problems. Reflecting this slippage, the Organization of the Petroleum Exporting Countries in November trimmed Nigeria’s production quota by about 200,000 barrels a day to 1.5 million a day.

Zoe Yujnovich, Shell’s director for production, said the company’s aim was “simplifying our portfolio.” She also said in a statement that Shell wanted to focus its future investment in Nigeria on offshore drilling and liquefied natural gas, a business in which Shell is a global leader.

Offshore operations are also much easier to protect from the piracy and other problems that have plagued oil production in Nigeria.

Shell’s onshore oil business in Nigeria dates back more than 60 years. Once a promising and productive part of Shell’s operations, it has also resulted in a series of lawsuits over oil spills and harm to local people.

The move raises issues of whether the company is trying to avoid future responsibility for past actions.

“They are selling their decrepit infrastructure to local companies and leaving local communities in a state of environmental disaster,” said Daniel Leader, a partner in the London-based law firm Leigh Day, which has represented Nigerian communities in cases against Shell.

Shell said that the buyers would be “accountable” for the Shell subsidiary’s share of “commitments” and for “remediation” of past spills.

The prospective buyers of Shell’s business make up a consortium called Renaissance Africa Energy. It consists of four Nigerian companies and a small international company. The buyers will be the operator or manager of the joint venture.

The transaction seems unusually complex. Shell says that it will receive $1.3 billion and that there could be other payments, up to an additional $1.1 billion. It estimated the book value of the Nigerian subsidiary at $2.8 billion. The company is providing loans and other funds of up to $2.5 billion to help the buyers finance the transaction and to bolster continued operations at the joint venture.

Source link

Related Posts

U.S. Leading Soft Landing for Global Economy

The world is starting 2024 on an optimistic economic note, as inflation fades globally and growth remains more resilient than many forecasters had expected. Yet one country…

Job Market Starts 2024 With a Bang

The United States produced an unexpectedly sizable batch of jobs last month, a boon for American workers that shows the labor market retains remarkable strength after three…

6 Reasons That It’s Hard to Get Your Wegovy and Other Weight-Loss Prescriptions

About 3.8 million people in the United States — four times the number two years ago — are now taking the most popular weight-loss drugs, according to…

Sean Wang Lives His ‘Fairy Tale’ at Sundance

“I feel like I’m in a fairy tale,” Sean Wang said to the sold-out crowd gathered at the Ray Theater in Park City, Utah, last month for…

Meta’s Stock Surges After Jump in Profits

Meta’s stock price soared on Friday, adding hundreds of billions of dollars to the market value of the social media giant that owns Facebook, Instagram and WhatsApp….

He’s Lost His Marriage, His Followers and His Lamborghini

With its streamlined curves and glow-in-the-dark sound system, the silver Lamborghini Huracán Performante was the stuff of teenage fantasy: $350,000 of aerodynamic metals and lightweight upholstery, packed…

Leave a Reply

Your email address will not be published. Required fields are marked *