Is Shell, Oldest Oil Company in Nigeria, Leaving? Here’s What You Should Know
On Tuesday, January 16, 2024, Shell’s statement that it was selling its onshore operation in Nigeria sparked mixed reactions and was interpreted as the company, which started exploration operations in Nigeria in 1930, leaving the country.
In a statement, the UK company that pioneered Nigeria’s oil sector when it discovered oil in 1956 in Oloibiri said, “Shell has reached an agreement to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to Renaissance.”
Renaissance, a consortium of five companies, including four exploration and one production company based in Nigeria, is set to purchase Shell’s onshore operation at a reported $1.3 billion, with an additional $1.1 billion for “receivables and cash balances in the business.”
What Is Onshore Operation?
Engr David Okechukwu, an oil contractor in Port Harcourt, who is familiar with the development, told Neusroom that “Shell is not leaving Nigeria, but are selling their onshore operations: Land and Swamp rigs.”
Shell’s onshore fields, which have up to 15 onshore oil licenses in Nigeria, refers to all their oil operations that take place on land, typically involving the exploration, drilling, and production of oil, as opposed to offshore, which involves activities conducted in bodies of water such as oceans or seas.
Why Shell Is Leaving Onshore Operation
Reuters reported that Shell has sought to sell its Nigerian oil and gas business since 2021 to focus on the more lucrative and less problematic offshore sector. However, it is not the only foreign oil company to move its operations to the deep sea. In August 2022, the Nigerian government approved ExxonMobil’s request to sell four oilfields in the Niger Delta Region. Also, in late 2023, Equinor, a Norwegian oil company, agreed to sell its business to Chappal Energies.
Okechukwu said that operating onshore rigs can prove to be a challenge for some oil companies.
“Onshore operations sometimes pose challenges for oil companies due to community issues and vandalization,” he said.
In 2016, the Nigerian government sued Shell over the 2011 Bonga oil spills, demanding N1.3 trillion in compensation for communities affected. Although the case ruled in favor of Shell, in February 2023, more than 13,000 Nigerians from the Niger Delta area of Ogale filed a suit against Shell, asking the oil giant to take responsibility for the loss of their livelihood, including the destruction of farmland and water bodies due to oil spills.
But the suit on oil spills by communities is just one of the challenges oil companies contend with. There are often disputes between communities where oil fields are located and the companies that operate them. For instance, in December 2021, Otuasega community in Bayelsa shut down Shell’s facilities to protest its failure to provide electricity for the community as promised.
