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The Nigerian government has blocked Shell's attempt to sell its onshore oil business, which significantly blows the company's plans to exit this sector.
The divestment, which aimed to transfer Shell's Nigerian onshore assets to Renaissance Africa Energy Company Limited, did not meet regulatory approval.
Gbenga Komolafe, Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), confirmed the decision during the launch of the "Project One Million Barrels of Oil Per Day" initiative in Abuja on Monday, October 21.
He revealed that Shell's proposal failed regulatory scrutiny despite a pending $2.4 billion deal.
"In total, five divestment applications were submitted for approval. While four passed and secured ministerial consent, Shell's proposal to transfer its assets to Renaissance Africa Energy Company Limited was rejected," Komolafe said.
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The deal was set to provide Shell with $1.3 billion upfront, with an additional $1.1 billion contingent on the sale's completion.
Shell's decision to divest its onshore assets, which it has been trying to offload since 2021, was primarily influenced by ongoing regional challenges, including sabotage, oil theft, and environmental liabilities.
"This sale was a relief for Shell, as the company has been seeking to offload these assets since 2021," Komolafe added.
Federal government stance
However, the government prioritised national interests, stating that transactions must align with its broader goals.
"The government remains committed to free entry and exit in business transactions, but such moves must align with national priorities," Komolafe stressed.
He further noted that Nigeria is committed to maintaining a fair business environment, as outlined in President Bola Tinubu's recent Independence Day speech.
"Nigeria fully supports free market operations, but regulatory decisions must safeguard national interests," he explained.
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Shell to continue business in Nigeria
Despite this regulatory setback, Shell reiterated that it is not leaving Nigeria. Osagie Okunbor, Managing Director of Shell Petroleum Development Company (SPDC), clarified that the company is shifting its focus to deep offshore operations.
"We are not exiting Nigeria. Instead, we are focusing more on the deepwater where our technological and financial capabilities provide a significant advantage," Okunbor said at the Nigerian Economic Summit.
As Nigeria continues to oversee the divestment process, Shell's future strategy now appears centred on offshore ventures, distancing itself from the difficulties associated with its onshore operations.