The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has denied granting approval for Shell PLC’s planned $1.3 billion sale of its onshore subsidiary, Shell Petroleum Development Company of Nigeria Ltd. (SPDC), to local company Renaissance Africa Energy Co. Ltd. The news emerged amidst growing speculation and conflicting reports about the status of the high-profile transaction.
On Wednesday, Nigerian newspaper BusinessDay reported, citing senior government sources, that the deal had received the necessary clearance from the NUPRC in accordance with the Petroleum Industry Act. The report suggested that the transaction, which is expected to boost Nigeria’s oil production and government revenues while supporting the naira and advancing gas development, was on the verge of final approval from President Bola Tinubu, who also serves as the Minister of Petroleum Resources.
However, the NUPRC swiftly refuted these claims, calling the report “baseless” in an official statement released on its website. The regulatory body emphasized that it had yet to approve the sale and would communicate its position on the matter to the public at the appropriate time.
“The NUPRC has not granted approval for the divestment,” the statement clarified. “We are still in the process of assessing the transaction, including evaluating environmental liabilities and ensuring compliance with regulatory standards.”
Shell, the British energy giant, announced the divestment on January 16, 2024, stating that it would allow the company to concentrate on its deepwater assets and downstream gas activities in Nigeria. The sale, valued at $1.3 billion, involves transferring SPDC’s onshore operations, which include 15 oil mining leases, to Renaissance Africa Energy Co. Ltd.
In April, several rights groups, including Amnesty International, urged the NUPRC to halt the divestment until Shell addressed concerns about “legacy pollution” from its infrastructure and verified the technical capabilities of the prospective buyer. The groups criticized the condition of Shell’s pipeline infrastructure in the Niger Delta, citing repeated oil spills and environmental damage.
“The sale of SPDC should not proceed until local communities have been fully consulted, the environmental impact has been assessed, and financial provisions for clean-up are guaranteed,” the rights groups asserted in a letter to the NUPRC dated April 8.
In response, the NUPRC organized a “due diligence workshop” in late April to review the sale and assess whether Renaissance Africa Energy Co. Ltd. had the financial and technical capacity to manage the assets responsibly. The NUPRC acknowledged that while the sale represented a significant step forward for Nigeria’s petroleum industry, careful consideration was necessary to address environmental and regulatory concerns.
Shell has maintained that the divestment is designed to preserve SPDC’s operational capabilities, including its technical expertise and management systems. The company has also emphasized its commitment to addressing oil spills, attributing many incidents in the Niger Delta to theft and sabotage rather than operational failures.
“Shell’s transaction with Renaissance Africa Energy Co. Ltd. is intended to ensure the continuation of SPDC’s operational capabilities,” Shell stated in its announcement. “We are confident that the new owner will uphold the high standards set by SPDC.”
The ongoing uncertainty surrounding the sale reflects broader trends in the Nigerian oil industry, where major international companies are increasingly focusing on offshore assets while divesting from onshore operations. In July, TotalEnergies SE announced the sale of its 10 percent interest in the SPDC joint venture to Nigerian-owned Chappal Energies Mauritius Ltd., and Eni finalized the divestment of Nigeria Agip Oil Company to local player Oando PLC in August, retaining a minority stake in the SPDC joint venture.
These divestments are part of a broader strategy by international energy majors to shift their focus to more lucrative and environmentally favorable deepwater and offshore projects. The NUPRC’s careful scrutiny of the Shell deal underscores the regulatory challenges and environmental considerations that accompany such high-value transactions.
As the NUPRC continues its review of the Shell divestment, all eyes will be on President Tinubu for the final decision on whether to approve the sale. The outcome will not only impact Shell’s future operations in Nigeria but also have broader implications for the country’s oil industry and regulatory environment.
