The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said it plans to assess environmental liabilities before it can allow Shell PLC to transfer onshore operations to a local player.
Shell early this year said it had signed an agreement with Renaissance Africa Energy Co. Ltd. selling Shell Petroleum Development Company of Nigeria Ltd. (SPDC) to the local consortium, in order to focus on deepwater assets and downstream gas activities in the West African country.
Last month, several rights groups wrote to the NUPRC calling for the agency to block the divestment until Shell has taken financial responsibility for “legacy pollution” from the infrastructure being transferred and until the technical capability of the prospective new owner has been established.
The NUPRC has now said in a statement it had organized a “due diligence workshop” on the divestment.
While the NUPRC called the sale to Renaissance a “noteworthy step forward in Nigeria’s petroleum industry”, it said the workshop had been held “to identify a successor with the financial resources and technical expertise to manage the assets responsibly”.
The statement added, “Key considerations include the assessment of environmental liabilities, adherence to regulatory requirements, and industry best practices”.
The NUPRC said it has put in place a seven-pillar framework for assessing divestments. “These pillars encompass technical capacity, financial viability, legal compliance, decommissioning obligations, host community engagement, labor relations, and data repatriation”, it said.
In the letter to the NUPRC dated April 8, the rights groups including Amnesty International alleged “widespread technical problems” with Shell’s pipeline infrastructure in the Niger Delta resulting in repeated spills.
“[T]he sale of SPDC should not be permitted unless local communities have been fully consulted; the environmental pollution caused to date by SPDC has been fully assessed; funds have been placed by SPDC in escrow sufficient to guarantee that clean-up costs will be covered; and the technical capacities of the beneficial entity have been verified and established”, the organization told the regulator.
A statement on oil spills on Shell’s Nigerian website says the company responds to incidents in accordance with regulations and globally accepted good practices. The statement highlights that the company publishes data on oil spills.
The statement says oil theft and sabotage are to blame for most oil spills in the Niger Delta. Of multiple incidents reported on the website for the first quarter of 2024, only one incident has been attributed to an “operational” cause, the rest “sabotage”.
Announcing the divestment agreement with Renaissance January 16, Shell said, “The transaction has been designed to preserve the full range of SPDC’s operating capabilities following the change of ownership”.
“This includes the technical expertise, management systems and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV)”, Shell added, referring to its 30 percent held and operated JV with Nigerian National Petroleum Co. Ltd. (55 percent), Total Exploration and Production Nigeria Ltd. (10 percent) and Nigeria Agip Oil Co. Ltd. (five percent).
Shell’s onshore operations in Nigeria, which are the subject of the divestment, consist of 15 oil mining leases operated under the JV, according to Shell.
Shell said the transaction was valued at $2.4 billion, including SPDC’s “prior receivables and cash balances”.
Besides Shell, multinational majors Eni SPA, Equinor ASA and Exxon Mobil Corp. have secured agreements to divest Nigerian assets.
Norway’s majority state-owned Equinor announced November 29, 2023, it had inked a deal to sell altogether its Nigerian business to Nigeria-domiciled Chappal Energies Mauritius Ltd.
On September 4, 2023, the Italian government-controlled Eni announced an agreement divesting one of its units in Nigeria, the onshore-focused Nigerian Agip Oil, to Oando PLC, saying the move is part of efforts to refocus on more profitable assets.
On February 25, 2022, Texas-based ExxonMobil announced an agreement to sell its equity stake in Mobil Producing Nigeria Unlimited to local player Seplat Energy PLC.
To contact the author, email jov.onsat@rigzone.com
GIPHY App Key not set. Please check settings