After almost 90 years nine decades
shell is selling its oil drilling business on Nigerian soil this is the second largest oil company in the world second only to Exxon Mobile
and shell finally has an exit plan.
it is selling off its onshore business in Nigeria for about 1.3 billion dollars up front and 1.1 billion in additional payments
this deal is for a number of assets
including shells existing facilities and 18 oil mining leasing the reserves are big estimated at about 458 million of million barrels of oil equivalent 4.58 million which translates to a lot of money way more than what shell is selling it for.
So why are they selling from the company’s perspective the Nigerian onshore business was a liability let me tell you why in 2008 there were two major oil spills tens of thousands of barrels of oil was spilled locals sewed shell for millions of dollars.
In 2015 the company paid the claimants $83 million in 2021 it paid more than $110 million
The United Nations has asked shell to clean up its mess the process is likely to last 30 years and cost over $1 billion local environmental groups have also been after shell
with numerous lawsuits over the oil spills and not just for the big incidents for smaller spills as well
regular ones that occur
due to theft as people keep stealing oil from shells Nigerian operations
and this results in frequent smaller oil spills.
Shell then has to clean up, the oil giant also faces sabotage attempts by locals who want the company to share its wealth and help make up for the damage it caused so the problem seemed unending and all of this got too much for shell which is why they want out of the Nigerian onshore business.
They’ve been trying to do this for about two years and now they finally got their buyers
a consortium of five companies
four of them are local firms
meaning more of the oil wealth would stay in Nigeria but it’s not exactly a steal for this consortium,
these new owners will have to fix the mess that shell is leaving behind they will have to assume responsibility for the cleanup work.
While shell gets to walk away
it will no longer drill on the Nigerian mainland or in shallow waters near the Niger River Delta that wasn’t the most profitable venture anyway
shell won’t leave Nigeria completely
this is Africa’s largest oil producer after all the company will just exit the mainland it will continue to operate in the deep sea
in the Gulf of Guinea and this mining is more profitable
and less at risk from theft or sabotage shell also has other businesses in Nigeria.
It has a gas supply firm a solar power unit and stakes in liquefied natural gas or LNG so
Shell’s logo will still be seen in Nigeria after this but with the sale of the onshore business a major problem will be dealt with
a problem for both the company and the locals it’s just one last step
approval from the Nigerian government after that both shell and the locals can end their troubled relationship.