Shell to sell Nigerian onshore subsidiary SPDC to Renaissance consortium for $1.3bn

In a significant move within the Nigerian oil industry, Shell has reached an agreement to sell its onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium named Renaissance. This consortium is a collaboration of five companies, including four Nigeria-based exploration and production companies and an international energy group. The deal, valued at $1.3 billion, is contingent on approvals from the Federal Government of Nigeria and other conditions.

Preservation of SPDC’s Operating Capabilities

The transaction has been meticulously designed to maintain SPDC’s operational strengths post-transfer. These include the subsidiary’s technical expertise, management systems, and processes, which SPDC utilizes for the benefit of all members in the SPDC Joint Venture. Importantly, SPDC’s staff will remain employed under the new ownership, ensuring a smooth transition.

Shell Agrees to Sell SPDC to Renaissance Consortium for $1.3 Billion

Shell’s Continued Role and Future Focus

Post-completion, Shell will maintain a supportive role in managing SPDC JV facilities that supply a significant portion of the feed gas to Nigeria LNG (NLNG), underlining its commitment to assisting Nigeria in maximizing value from NLNG. In line with its global strategy, Shell aims to concentrate future investments in Nigeria on Deepwater and Integrated Gas positions.

Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, highlighted the deal’s significance: “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.”

Yujnovich further added, “It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium.”

Details of the SPDC Joint Venture and Renaissance Consortium

The SPDC JV, an unincorporated joint venture, comprises SPDC Ltd (30%), the government-owned Nigerian National Petroleum Corporation (55%), Total Exploration and Production Nigeria Ltd (10%), and Nigeria Agip Oil Company Ltd (5%). The JV holds 15 oil mining leases for onshore petroleum operations and three for shallow water operations in Nigeria.

Renaissance, the acquiring consortium, includes ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin. The deal also includes additional cash payments by the buyer to Shell, primarily related to prior receivables and cash balances in the business, with the majority expected to be paid at the transaction’s completion.

Shell’s Ongoing Commitment to Nigeria’s Energy Sector

Despite the sale, Shell remains actively involved in Nigeria’s energy sector through its other main businesses, including Shell Nigeria Exploration and Production Company Limited (SNEPCo), Shell Nigeria Gas Limited (SNG), and Daystar Power Group. Additionally, Shell holds a 25.6% interest in NLNG, further cementing its role in Nigeria’s growing energy needs and export ambitions.