British energy giant, Shell has agreed to sell its Nigerian onshore oil assets to a consortium of local companies for US$2.4 billion.
The company revealed this in a statement posted on its website.
According to Shell, it is selling its Nigerian subsidiary, Shell Petroleum Development Company of Nigeria Limited (SPDC), for a consideration of $1.3 billion, with buyers making an additional payment of up to $1.1 billion relating to prior receivables at completion.
The buyer of the asset, known as Renaissance, is a consortium formed of ND Western, Aradel Energy, First Exploration & Production (E&P), Waltersmith, and Petrolin.
“Completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions,” the statement reads.
Shell said it will remain a major investor in Nigeria’s energy sector through its deepwater and integrated gas businesses.
Following completion, Shell said it “will retain 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”.
The SPDC JV is an unincorporated joint venture comprised of SPDC Ltd (30 percent), the Nigerian National Petroleum Company Limited (55 percent), Total Exploration and Production Nigeria Ltd (10 percent), and Nigeria Agip Oil Company Ltd (5 percent).
The SPDC JV holds 15 oil mining leases for petroleum operations onshore and three for petroleum operations in shallow water in Nigeria — operated by SPDC.
“The consideration payable to Shell as part of the transaction is US$1.3bln,” the statement further reads.
“The buyer will make additional cash payments to Shell of up to US$1.1bln, primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid at completion of the transaction.
“The amounts above will be adjusted to reflect any shareholder distributions, above US$200 million, made prior to completion.
Other contingent payments, including those related to gas supply to NLNG, may become payable depending on business performance and fluctuation of product prices.”
Shell noted that it has three other main businesses in Nigeria that are outside the scope of the transaction.
They include Shell Nigeria Exploration and Production Company Limited (SNEPCo), Shell Nigeria Gas Limited (SNG), and Daystar Power Group.
“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions,” Zoe Yujnovich, Shell’s integrated gas and upstream director, said.
Source: https://energynewsafrica.com
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