The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Wednesday denied granting clearance for Shell PLC’s sale of its onshore subsidiary to a local player.
Citing unnamed senior government sources, Nigerian newspaper BusinessDay reported that the $1.3 billion divestment of Shell Petroleum Development Company of Nigeria Ltd. (SPDC)to Renaissance Africa Energy Co. Ltd. “got the green light from the regulatory commission as required by the Petroleum Industry Act”.
“This deal, if successful, is expected to increase Nigeria’s oil production, boost government petrol dollar earnings, support the naira and accelerate the government’s plans for gas development”, read the report on BusinessDay published Wednesday.
“The deal, however, still requires the final approval of President Bola Tinubu, who currently holds the portfolio of minister of petroleum resources”.In a statement, the NUPRC called the report “baseless”.The upstream regulator “will communicate its position on the transaction to the public at the appropriate time”, said the statement on its website.
It previously said it planned to assess environmental liabilities before it could allow Shell to complete the divestment that the British energy giant announced January 16.Shell said then the divestment would allow it to focus on deepwater assets and downstream gas activities in the West African country.
In April several rights groups wrote to the NUPRC calling for the agency to block the divestment until Shell took financial responsibility for “legacy pollution” from the infrastructure being transferred and until the technical capability of the prospective new owner was established.
The NUPRC said in a statement April 29 it had organized a “due diligence workshop” on the divestment. While the NUPRC called the sale to Renaissance a “noteworthy step forward in Nigeria’s petroleum industry”, it said the workshop had been held “to identify a successor with the financial resources and technical expertise to manage the assets responsibly”.
The statement added, “Key considerations include the assessment of environmental liabilities, adherence to regulatory requirements, and industry best practices”.In the letter to the NUPRC dated April 8, the rights groups including Amnesty International alleged “widespread technical problems” with Shell’s pipeline infrastructure in the Niger Delta resulting in repeated spills.
“… the sale of SPDC should not be permitted unless local communities have been fully consulted; the environmental pollution caused to date by SPDC has been fully assessed; funds have been placed by SPDC in escrow sufficient to guarantee that clean-up costs will be covered; and the technical capacities of the beneficial entity have been verified and established”, the organization told the regulator.
A statement on oil spills on Shell’s Nigerian website says the company responds to incidents in accordance with regulations and globally accepted good practices. The statement highlights that the company publishes data on oil spills. The statement says oil theft and sabotage are to blame for most oil spills in the Niger Delta.
Announcing the divestment agreement with Renaissance, Shell said, “The transaction has been designed to preserve the full range of SPDC’s operating capabilities following the change of ownership”.
“This includes the technical expertise, management systems and processes that SPDC implements on behalf of all the companies in the SPDC Joint Venture (SPDC JV)”, Shell added, referring to its 30 percent-owned and operated JV with Nigerian National Petroleum Co. Ltd. (55 percent), Total Exploration and Production Nigeria Ltd. (10 percent) and Eni SPA’s former subsidiary Nigeria Agip Oil Co. Ltd. (five percent).
Shell’s onshore operations in Nigeria, which are the subject of the divestment, consist of 15 oil mining leases operated under the JV, according to Shell.On July 17 TotalEnergies SE said it had also agreed to sell its 10 percent interest in the SPDC JV to Nigerian-owned Chappal Energies Mauritius Ltd., also to focus on its offshore Nigerian assets.
Meanwhile Eni announced August 22 it had finalized the divestment of onshore-focused Nigeria Agip Oil (NAOC) to local player Oando PLC. However, the Italian energy major retained NAOC’s five percent interest in the SPDC JV.Eni also said the divestment allows it to focus on deepwater assets.
Source:https://www.rigzone.com