Strategic Move for Streamlining:
In a strategic move to limit exposure amid longstanding environmental concerns in Nigeria, Shell has agreed to sell its onshore business in the Niger Delta to a consortium of companies for $2.4 billion. The deal, led by Renaissance consortium comprising ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, aligns with Shell’s objective to streamline operations in a country it has been operating in for decades. The move aims to address criticisms of environmental pollution caused by oil spills and ease tensions in the region.
Assets and Consortium Details:
The assets being sold, largely owned by the Nigerian government’s national oil company NNPC, include 15 onshore mining leases and three shallow-water operations. The consortium will make an initial payment of $1.3 billion, with an additional $1.1 billion to follow. Shell, which holds a 30% stake, operates the assets alongside France’s TotalEnergies (10%) and Italy’s Eni (5%). Approval from the Nigerian government is crucial for the finalization of the deal.
Environmental Concerns and Activist Stance:
Despite the transaction, environmental activists in the Niger Delta, where Shell has faced prolonged criticism, plan to request the government to withhold approval until environmental issues are adequately addressed. Ledum Mitee, a veteran environmental activist, emphasizes the need for transparency in addressing legacy environmental and decommissioning issues before any divestment takes place.
Nigeria’s Dependency and Environmental Impact:
Nigeria heavily relies on the petroleum resources of the Niger Delta for its earnings, but pollution from oil and natural gas production has taken a toll on the region. Residents face challenges accessing clean water, and farming and fishing activities are adversely affected. The situation has also led to heightened tensions and exploitation by militants. Despite government amnesty packages, the Niger Delta remains volatile, with ongoing risks of violence and pipeline vandalism.
Shell’s Continued Presence in Nigeria:
If approved, the sale will see Shell exiting its onshore business but retaining at least three subsidiary operations in Nigeria, focusing on Gulf of Guinea deep-water operations, an industrial gas business, and solar power for industrial activities. These subsidiaries fall outside the scope of the transaction with the Renaissance consortium, allowing Shell to maintain a strategic presence in key sectors of the Nigerian market.
SOURCE: Ref Image from Chronicle.ng
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