ABUJA – Nigeria has blocked Shell’s (NYSE: SHEL) sale of its entire onshore and shallow-water oil operations but approved a similar deal by Exxon Mobil (NYSE: XOM), the country’s upstream oil regulator said on Monday.
Shell’s asset sale for up to $2.4 billion to the Renaissance consortium, comprising five companies, was first announced in January. Exxon’s deal with Seplat Energy has awaited regulatory approval for over two years since a $1.28 billion fee was announced in February 2022.
In a speech at an event in the capital Abuja, Nigerian Upstream Petroleum Regulatory Commission (NUPRC) CEO Gbenga Komolafe said the Shell deal “could not scale (the) regulatory test,” but did not elaborate. Exxon’s transaction was granted ministerial approval.
On October 1, President Bola Tinubu signaled that the Exxon-Seplat deal would receive ministerial approval in a matter of days after getting clearance from the regulator.
“We welcome the regulator’s announcement and look forward to formally receiving the ministerial consent as we work toward the conclusion of the sale,” Exxon said in a statement.
A Shell spokesperson did not immediately respond to a request for comment.
The rejection is a blow to Shell’s (NYSE: SHEL) strategy to pivot toward deepwater for future investments and reflects the growing challenges that oil companies face in Nigeria.
Oil majors operating in Nigeria, Africa’s largest oil exporter, have been retreating from onshore operations hampered by theft and sabotage, opting to focus future investments on newer and more lucrative deep offshore fields.
The Shell assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of associated and non-associated gas.
Under Exxon’s deal, Seplat will own 40% of four oil mining leases and associated infrastructure, including the Qua Iboe export terminal, and 51% of the Bonny River natural gas liquids recovery plant previously owned by Mobil Producing Nigeria Unlimited, Exxon’s local unit.
In trying to exit the oil-rich Niger Delta, Shell follows Exxon Mobil, TotalEnergies (NYSE: TTE), and Eni (NYSE: E) who wanted to do so due to security concerns.
In July, NUPRC approved Eni’s local unit’s sale of onshore assets to Oando and another sale from Equinor (NYSE: EQNR) to the new entrant Project Odinmim.
Environmental activists and some communities opposed the Shell-Renaissance deal, tying Shell to a string of lawsuits for environmental restoration and compensation for land and rivers damaged by oil spills.
In April, NUPRC started evaluating Shell’s divestment to the consortium, which comprises four Nigerian exploration and production companies and an international energy group.
(Source: ReutersReuters)
