Shell’s Africa playbook: From onshore divestments to deep-water consolidation

Why Is Shell Increasing Its Deep-Water Control in Africa?

Shell plc‘s $510 million acquisition of TotalEnergies’ 12.5% stake in Nigeria’s Bonga field marks a critical milestone in its upstream portfolio consolidation across Africa. With this transaction, Shell Nigeria Exploration and Production Company (SNEPCo) now controls 67.5% of the Oil Mining Lease 118 (OML 118) block, reinforcing operational authority in one of West Africa’s most prolific offshore developments.

This is not an isolated transaction. It is a definitive move in Shell’s broader Africa strategy, which has pivoted from high-risk onshore assets toward selective deep-water plays that offer scale, control, and capital efficiency. The shift aligns with Shell’s post-2021 upstream realignment—prioritizing lower-carbon barrels, high-margin projects, and assets with strategic operator positions.

Why Did Shell Begin Divesting from Nigeria’s Onshore Sector?

In 2021, Shell formally announced plans to divest its interest in Shell Petroleum Development Company of Nigeria Ltd. (SPDC), citing repeated oil theft, sabotage, security risks, and increasing community litigation. Despite Nigeria’s rich onshore reserves, the operating environment had grown unpredictable, with production interruptions and reputational damage outweighing returns.

By 2023, Shell initiated a sale process involving a consortium known as Renaissance. However, as of mid-2025, the sale awaits regulatory approval by the Nigerian authorities, delaying Shell’s full exit. Regardless, the company has already rechanneled strategic attention—and capital—toward offshore assets where risk is lower and control is higher.

Bonga, a flagship deep-water asset with a decade-long performance record and scalable upside, now serves as the centerpiece of Shell’s Nigerian upstream operations.

What Makes the Bonga Field Central to Shell’s Strategy?

Located 120 kilometers offshore in over 1,000 meters of water, the Bonga field started production in 2005 and was Nigeria’s first deep-water project. Developed under the OML 118 Production Sharing Contract, it is operated by SNEPCo in partnership with Esso Exploration and Production Nigeria Ltd. (20%), Nigerian Agip Exploration Ltd. (12.5%), and formerly TotalEnergies EP Nigeria Ltd. (12.5%).

Bonga reached the milestone of one billion barrels produced in 2023 and continues to operate through its FPSO (Floating Production, Storage and Offloading) vessel. The field remains a reliable contributor to Nigeria’s offshore oil output, which remains crucial given the country’s ongoing underperformance in meeting OPEC quotas.

Shell announced a final investment decision (FID) for Bonga North in December 2024. This subsea tie-back is projected to add 300 million barrels of recoverable resources and achieve a peak output of 110,000 barrels per day. The project utilizes existing Bonga FPSO infrastructure, minimizing new capex while optimizing returns.

With the latest transaction, Shell now has majority control over the field’s economics, development timelines, and environmental compliance—core levers in its upstream capital strategy.

Where Else in Africa Is Shell Rebalancing Its Upstream Exposure?

Beyond Nigeria, Shell’s African upstream activity is guided by selectivity and capital discipline rather than geographic expansion. In South Africa, Shell holds exploration interests in offshore blocks, particularly in the Eastern Cape’s Wild Coast region. However, court-ordered injunctions and strong public opposition to seismic surveys have stalled these efforts. As of 2025, no commercial discoveries or sanctioned developments have materialized.

In Namibia, Shell has delivered some of the most watched exploratory results in Africa since 2022. The company made multiple offshore discoveries in the Orange Basin, including the Graff and La Rona wells. While Shell has not yet declared commerciality or sanctioned full development, its public disclosures have described the finds as “encouraging,” with further appraisal underway in 2025.

These selective engagements—combined with the exit from Ghana’s Jubilee and TEN fields in 2018–19—illustrate Shell’s posture: Africa remains a priority only when geological potential intersects with fiscal attractiveness and regulatory clarity.

How Does Deep-Water Oil Fit Shell’s Global Transition Model?

Shell’s Energy Transition Strategy, first outlined in 2021 and updated through 2024, aims to reduce oil production gradually, invest heavily in LNG, and decarbonize upstream output. Even with net-zero ambitions, the company acknowledges that high-margin oil production will remain vital to fund the transition.

Deep-water fields like Bonga check several strategic boxes. They offer lower carbon intensity per barrel due to scale and centralized operations. They reduce above-ground risk compared to Nigeria’s onshore Delta basin. They also benefit from integrated infrastructure, allowing FPSO reuse, emissions tracking, and potential future decarbonization.

Shell’s goal to grow upstream and integrated gas production by 1% per year through 2030 depends on scalable, operator-led fields like Bonga North. The economics are further enhanced by Shell’s control of field development and its ability to deploy emissions abatement technologies across the asset lifecycle.

What Is the Institutional and Market Reaction to Shell’s Bonga Deal?

Institutional investors have responded positively to the Bonga acquisition, viewing it as consistent with Shell’s upstream rationalization. Energy-focused funds tracking operator-led, high-return assets have modestly increased exposure to Shell since the May 28 announcement.

Analysts at Bernstein noted that the $510 million deal was “highly strategic” and provides clarity on reserve growth. UBS highlighted that the move strengthens Shell’s upstream cash flow visibility while maintaining low-cost production growth.

At the same time, the muted market reaction reflects investor awareness that Shell’s upside is now judged not by volume growth, but by capital discipline, emission performance, and shareholder returns. Shell’s stock has shown stability with slight upward pressure in European trading since the announcement.

TotalEnergies, for its part, is seen to be recycling capital into LNG and low-carbon growth areas—a move aligned with its global strategy to reduce breakeven and emissions intensity.

Will Shell Pursue More African Asset Consolidation?

There is cautious speculation that Shell may pursue similar consolidations in other offshore fields across Nigeria or Namibia, should fiscal terms and geological data align. However, analysts widely agree that the company’s Africa strategy is no longer driven by exploration expansion but by disciplined scaling of proven assets.

The Petroleum Industry Act (PIA), enacted in 2021, has provided more transparent fiscal frameworks for Nigeria’s offshore sector, which may accelerate approvals for projects like Bonga North and potential satellite fields.

Shell’s future actions will likely hinge on the successful execution of Bonga North, which is expected to deliver first oil between 2029 and 2030. It will also depend on regulatory green lights for the long-delayed SPDC divestment and results from Namibia’s Orange Basin appraisal campaign.

Sentiment Summary

Investor sentiment around Shell plc has remained moderately bullish following the Bonga transaction. Institutional flows have favored Shell’s capital allocation model, especially among upstream-weighted energy portfolios. Analysts view the deal as strengthening Shell’s free cash flow engine while supporting future dividend and buyback programs.

TotalEnergies SE, which sold the stake, has also drawn positive sentiment for its capital recycling strategy. The company’s redeployment into LNG infrastructure and African gas development projects such as Ubeta reflects a disciplined approach toward decarbonized energy growth.

Strategic Outlook: Africa as a Targeted Frontier, Not a Volume Play

Shell’s Africa strategy in 2025 is a study in concentration. Gone are the days of broad exploration across the continent. What remains is a clear focus on assets that offer operator control, capital efficiency, and resilience against regulatory, social, and environmental disruptions.

The increased stake in Bonga reflects that logic. Shell now controls a production base with scalable expansion potential and manageable risks—essential features in an era where investor scrutiny demands both profitability and accountability.

In the years ahead, Shell’s African footprint is unlikely to expand outward—but it may deepen. And in deep waters like those off Nigeria and Namibia, the company appears more committed than ever to writing the next chapter of its upstream story.