Nigeria Blocks Shell's Sale of Oil Operations

ABUJA (Reuters) — Nigeria has blocked Shell's sale of its onshore and shallow-water oil operations, but has approved a similar deal by Exxon Mobil, according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC).

Shell's asset sale for up to $2.4 billion to the Renaissance consortium was first announced in January. In contrast, Exxon's agreement with Seplat Energy has awaited regulatory approval for more than two years since a $1.28 billion fee was announced in February 2022.

In a speech at an event in Abuja, NUPRC CEO Gbenga Komolafe stated that Shell's deal "could not scale (the) regulatory test," without further elaboration. Meanwhile, Exxon's transaction received ministerial approval.

President Bola Tinubu had indicated on Oct. 1 that the Exxon-Seplat deal would soon receive ministerial approval after clearing the regulator's review. "We welcome the regulator’s announcement and look forward to formally receiving the ministerial consent as we work toward concluding the sale," Exxon said in a statement.

A Shell spokesperson has not yet provided comments regarding the rejection. The setback is a blow to Shell's strategy to move towards deepwater investments, illustrating the challenges faced by oil companies in Nigeria, which is Africa's largest oil exporter.

Many oil majors in Nigeria have been reducing their onshore operations due to theft and sabotage issues, choosing to focus on newer, more lucrative deep offshore fields. The assets Shell aimed to sell hold an estimated 6.73 billion barrels of oil and 56.27 trillion cubic feet of gas.

Under Exxon's deal, Seplat will acquire 40% of four oil mining leases and infrastructure, including the Qua Iboe export terminal, and 51% of the Bonny River natural gas liquids recovery plant, previously owned by Mobil Producing Nigeria Unlimited.

Shell is following in the footsteps of Exxon Mobil, TotalEnergies, and Eni, who have also sought to exit the oil-rich but troubled Niger Delta region due to security concerns. NUPRC previously approved Eni's sale of onshore assets to Oando and another sale from Equinor to Project Odinmim.

Environmental activists and local communities have opposed the Shell-Renaissance deal, linking Shell to lawsuits for environmental restoration and compensation related to oil spills.

In April, NUPRC began evaluating Shell's divestment to the Renaissance consortium, which includes four Nigerian exploration firms and an international energy group.