Shell Accepts To Sell Nigerian Onshore Subsidiary (SPDC) To Renaissance Consortuim

Breaking News | Article: Shell agreement to sell SPDC Summary case

According to Shell Official website and X - handle, they have accepted a proposal to relinquish their 40 year old Nigerian Onshore Subsidiary, SPDC for a whooping sum of $1.3Billion US Dollars with an additional sum of $1.1 Billion US Dollars to Renaissance Consortuim.

Brief History of Shell Operations in Nigeria 

Formally The Royal Dutch Company but now simply known as Shell Plc have been the leading pioneer in Oil exploration in West Africa and the Nigeria Oil Exploration Industry since 1930's. They have been operating in Nigeria for more than 50 years now. There major exploration have been in the Niger Delta region of the country. They are involved in both Onshore and Deepsea oil exploration. Despite their resounding success, Shell has struggled for years with hundreds of oil spills at its onshore operations as a result of theft, sabotage and operational issues that led to costly repairs and high-profile lawsuits.

Worthy of note is that Shell Company Plc entered into a joint partnership with the Nigeria Government through their SPDC arm in 1993 to indulge in a Production Sharing Contracts signed –SNEPCO Established

Sixth Participation Agreement; (NNPC=55%, Shell=30%, Elf= 10%, Agip=5%). Plus the coming on-stream of Elf's Odudu blend, offshore OML 100. 

Click here to know more about the Shell Petroleum Development Company, SPDC

SHELL'S COMMUNITY SERVICE

For over three decades, Shell has enjoyed this partnership. In giving back to the community, Shell introduced The SPDC JV Cradle-to-Career Scholarship scheme managed by Shell Petroleum Development Company Limited (SPDC) on behalf of the joint venture which started since 2010. More than two thousand students have since benefitted up till date.  

This section is not exactly up to date with all the Services the SPDC arm of Shell have offered to the Niger-Delta region.

The Sale of SPDC

On December 31, 2022, the Security and Exchange Commission proved reserves that are the subject of the transaction were approximately 458 MMboe. Before now, SPDC JV held 15 oil mining leases for petroleum operations Onshore and 3 oil mining leases for exploration in the shallow waters. 

All these will be sold based on approval by the Federal government to Renaissance Consortuim for a consideration payable to Shell as part of the transaction is $1.3bn with an additional cash of $1.1bn.  According to the agreement, The amounts above will be adjusted to reflect any shareholder distributions, above US$200 million, made prior to completion of the transaction. 

Sponsored

This transaction accrues the economic management of the value of SPDC which was currently at US$2.8bn as at December 31st, 2021. Until the completion of the transaction, Shell will be in control of SPDC

However, Following completion, Shell will be retaining a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG.

Other Businesses of Shell not Involved in this Transaction 

According to Shell, there are three of their other main businessea not involved in this transaction and they include:

1. Shell Nigeria Exploration and Production Company Limited (SNEPCo), which produces oil and gas in the deepwater Gulf of Guinea;

2. Shell Nigeria Gas Limited (SNG), which provides gas to domestic industrial and commercial customers; 

3. Daystar Power Group, which provides integrated solar power to commercial and industrial business across West Africa.

What You Need To Know About Renaissance Consortium

Little is currently know about Renaissance Consortuim, however it is formed of ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin.

Will the employees currently on SPDC payroll be affected?

The employees will not be affected. According to Shell Plc, the current employees will move into the payroll of the new owners and all activities will continue the same.

Sponsored 

Conclusion

As of today, January 16th in London, Shell Plc has reached an agreement to sell its Nigerian onshore subsidiary - The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group. Completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.