Nigerian government has turned down Shell's proposal to divest its onshore oil operations in Nigeria to Renaissance Africa Energy Company Limited.
Gbenga Komolafe, the Chief Executive Officer of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), made this announcement during the launch of the one million barrels of oil per day initiative in Abuja on Monday.
Mr. Komolafe stated that the rejection was due to the deal's failure to meet the necessary regulatory requirements.
Earlier in January, Shell's Nigerian subsidiary reached an agreement with a consortium of five companies, paving the way for the acquisition of its onshore assets in the country.
This agreement followed several years of challenges faced by Shell in its attempts to transfer ownership of these assets.
Shell Petroleum Development Company of Nigeria Limited (SPDC) was set to receive up to $2.4 billion from the deal, which included an initial payment of $1.3 billion, with an additional $1.1 billion expected for prior receivables and cash balances upon completion.
The transaction was seen as a significant relief for Shell, which has been looking to divest these assets since 2021 due to issues related to sabotage, theft, and oil spills, some of which have led to legal disputes and environmental responsibilities.
On Monday, Mr. Komolafe noted that out of five divestment applications submitted to the commission, four—accounting for 80 percent—successfully passed the regulatory assessment and received ministerial approval.
The approved transactions include Mobil Producing Nigeria Unlimited (MPNU) to Seplat Energy Offshore Limited, Equinor Nigeria Energy Company Limited to Project Odinmin Investments Limited, Nigerian Agip Oil Company Limited to Oando Petroleum and Natural Gas Company Limited, and TotalEnergies EP Nigeria Limited to Telema Energies Nigeria Limited.
Mr. Komolafe stated that the divestment of Shell Petroleum Development Company Limited's assets to Renaissance Africa Energy Company Limited did not meet regulatory requirements.
He emphasized that divestment is a recognized practice and a right of investors in their business decisions worldwide.
"Nigeria is fully committed to the principles of free entry and exit, as reiterated by our esteemed President, His Excellency, Bola Ahmed Tinubu, in his speech on October 1, 2024. To operationalize this principle, the NUPRC has established seven regulatory pillars to guide divestment in the upstream oil sector, ensuring both order and the protection of national interests," he added.
He also announced the successful completion of the divestment exercise conducted by the commission in accordance with the Petroleum Industry Act (PIA).
Last week, Shell Petroleum Development Company (SPDC) clarified that it is not exiting Nigeria but is instead reallocating its portfolio and future investments towards deep offshore operations.
Osagie Okunbor, Managing Director of Shell Petroleum Development Company and Country Chair for Shell Companies in Nigeria, shared this information during the recent 30th edition of the Nigerian Economic Summit, highlighting the company's focus on deepwater projects where it holds significant technological and financial advantages.