Logo
* Indigenous oil coys jostle to take over
* NUPRIC subjects Seplat,Oando, Renaissance to scrutiny
* Amnesty International raises concern over Shell’s unresolved pollution
Agency report
Fresh crises are brewing over Shell’s planned exit from the onshore segment of Nigeria’s oil and gas industry while Nigerian firms scout $4.5 billion to buy out the assets of the company and those of ExxonMobil and Nigerian Agip Oil Company Limited (NAOC).
While Renaissance Africa Energy, yesterday, announced that it has reached an agreement with Shell to acquire the oil major’s 100 per cent holding in the Shell Petroleum Development Company of Nigeria Limited (SPDC) for $2.4 billion, Seplat has been on a long queue for ExxonMobil onshore assets for $1.3 billion just as Oando recently secured $800 million loan for the acquisition of NOAC four onshore blocks (OML 60, 61, 62, 63).
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC), told The Guardian that the move is a blessing in disguise and insisted that all the companies must face scrutiny as none of the oil firms, including ExxonMobil which has indicated interest close to a year ago, has been able to provide convincing details under a new divestment template set up by the government.
This comes as Amnesty International, yesterday, asked the Nigerian government to compel Shell to pay for the years of environmental pollution in the Niger Delta before getting to the exit door.
The ongoing divestment by the international oil companies (IOCs) in Nigeria has brought to the fore, a multitude of pressing issues within the oil sector. Notable concerns include abandonment, decommissioning, oil theft, pipeline vandalism, a surge in court cases and environmental degradation.
As the divestment gains momentum, the challenges become increasingly demanding, necessitating thoughtful solutions. For more than a decade, select IOCs operating in Nigeria have pursued divestment strategies, with a particular focus on exiting shallow waters and onshore while maintaining interests in the deep waters and downstream sectors.
However, the strategic shift is a double-edged sword, presenting both curses and blessings on the same plate. The complexities surrounding abandonment, decommissioning and the surge in environmental issues, legal crises, labour conflicts, vandalism, capital/technical challenges for Nigerian companies are upsetting stakeholders.
Nigeria is facing crises with oil production which has been on the decline over the last nine years, especially in the last decade due to the lack of investment in the sector.
Coupled with climate issues, Nigeria has, in recent years, seen $21 billion worth of assets divested even as the country’s total yearly upstream capital expenditure nosedived from $27 billion in 2014 to less than $6 billion in 2022, translating to a 74 per cent decline.
Speaking with The Guardian, the Chief Executive of NUPRC, Gbenga Komolafe said the regulator has been conscious of safeguarding the interest of the country, stressing that while divestment by the international oil companies is purely a business decision and has a positive side for indigenous companies, a six-box template must be ticked to avoid short-changing of the interest of Nigerians.
Komolafe said approval has not been granted for ExxonMobil divestment because the firm has not been able to tick the boxes for onward approval to the Minister of Petroleum who doubles as the President of the country.
According to him, the divestment allows domestic and international investors to come into Nigeria and show technical and financial capability even as the local investor has a better understanding of the environment.
Komolafe said: “We do not support that this is a hopeless or a negative situation. We see a level of positivity and ability in disability. Our major area of intervention is to design a divestment template. This was not in practice. We believe that what is more important is to see how the federation’s interests can be safeguarded. Even in the unfolding event, we must ensure that the nation is not short-changed.
“Every divestment must tick six pillars. These are technical capability, financial capability, legal clearance, decommissioning and abandonment, ESG and industrial relations and labour issues.”
For the Shell assets, a consortium, comprising ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited and Waltersmith Group, formed Renaissance. The acquisition move is coming on the backdrop of the rising exit of major oil companies from Nigeria or a portfolio restructuring that is seeing the IOCs retaining only their operations in the deep water.
Komolafe said both Renaissance Energy and Oando are being subjected to the new template and until they can show technical capacity, financial capacity, provide legal clearance, provide ESG framework, show abandonment and decommissioning approval as well as labour clearance, the process would remain elusive.
Amnesty International’s Head of Business and Human Rights, Mark Dummett, said while oil spills have damaged the health and livelihoods of many inhabitants of the Niger Delta for decades, Shell has earned billions of dollars from this business, and it must make sure that its withdrawal does not have negative human rights and environmental consequences.
The body called for an effective remedy for people whose rights have long been abused as Dummett insisted that “Shell should not be allowed to wash its hands of the problems and leave.
“We urge the Nigerian government to require Shell to provide a full assessment of existing pollution and the current state of its infrastructure. This information needs to be shared with affected communities.”
Dummett noted that Nigeria’s government must ensure that local inhabitants’ concerns about the sale are fully appraised and addressed and uphold and protect the human rights of its citizens, including their rights to an adequate standard of living, clean water and health.
Recall that Shell had been making moves to sell its assets, but the development has been hitting deadlock over a court ruling stopping the organisation from proceeding with the plan. A few days ago, the Supreme Court ruled in favour of allowing Shell to sell its assets.
Energy expert, Dan Kunle feared that the reasons deterring the multinational from the onshore, especially oil theft, vandalism and other harsh business conditions may affect the local investors unless the government focuses on addressing the problems.
He believes that divestment remained a normal business practice for companies to move away from operations that are no longer favourable to them. An industry insider, who pleaded anonymity said Renaissance Energy is buying the assets as well as the liabilities of Shell, adding that the new companies would be able to pay damages arising from pollution and other issues.
Source: The Guardian
About Author
