British energy giant Shell announced it is selling its onshore Nigerian subsidiary, Shell Petroleum Development Company of Nigeria (SPDC), to Renaissance, a consortium of four local firms and a Swiss-based investment group.
The deal, valued at $2.4 billion, represents a notable pivot for Shell, moving away from its longstanding yet troubled operations in the Niger Delta to concentrate on its offshore and integrated gas projects.
What shell is basically doing is selling off onshore assets that have past their peak production capacity to raise capital to fund their more lucrative LNG and offshore projects in Nigeria.
Is this situation peculiar to Nigeria? NO.
Globally, oil companies are favoring more offshore prospects where available to onshore assets. For example, one of the biggest oil and gas player in Brazil, Petrobras recently went on a divestment spree by selling off most of it onshore assets. The onshore assets were bought by local and international players, such as PetroReconcavo, 3R Petroleum and Origem Energia.
When profit margins, production capacity and environmental concerns are factored, offshore assets are better favored. There are also additional issues like sabotage and vandalization associated with onshore assets.
In December, after meeting with President Bola Tinubu, Shell Global Integrated Gas and Upstream Director, Ms. Zoe Yujnovich disclosed plans for a $6 billion investment in Nigeria LNG and the company’s existing Bonga North deepwater project.
Shell is not leaving the country as claimed by naysayers.
They currently have different offshore projects at different stages of implementation. There is the Shell’s Bonga South-West and Aparo project, which is set to be the biggest offshore capacity in Nigeria. After completion, it will add about 225,000 bpd to our production capacity.
There is also Bonga North project that is expected to add another 100,000bpd when completed.
With regards to LNG, Shell still maintains its 25.6% interest in Nigeria LNG. There is also the LNG project ongoing at Assa North-Ohaji South In Imo state, which when completed, will deliver 300 million of standard cubic feet of gas per day to the domestic gas market and sell 20,000BPD of condensate to a nearby refinery. To mention a few.
READ ALSO: Shell to sell onshore assets in Niger Delta, retains interest in deep water operations
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