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Nigeria approved a $1.3 billion deal that would see Renaissance Africa Energy (a group of local companies) buy Shell Plc’s onshore assets in Africa’s biggest crude producer.
Petroleum Resources Minister Heineken Lokpobiri is allowing Renaissance Africa Energy’s purchase of Shell Petroleum Development Co., a deal first announced in January, after the nation initially rejected the plan in October, the group said in a statement Wednesday.
The deal would fulfill Shell’s long-term goal of exiting operations in the challenging Niger Delta area. The company has received notification of the approval and is assessing it, the firm said in an emailed statement.
For decades, the company has been at odds with local communities over oil spills and accusations of human rights violations, something that increasingly clashed with its broader efforts to become cleaner and greener.
The buyer of the business, known as Renaissance Africa Energy, is formed of exploration and production companies ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin, all of which are based in Nigeria.
The gradual departure of the international oil majors from the West African country has tended to boost the presence of local companies.
Shell will provide the buyers with secured term loans of as much as $1.2 billion “to cover a variety of funding requirements”.
The London-based major will also give additional financing of as much as $1.3 billion over “future years” to fund SPDC’s share of the development of joint-venture gas resources, decommissioning and restoration costs. The company expects to take an impairment to the $2.8 billion net book value of the unit upon completion of the deal.
Following the sale, Shell will continue operating in Nigeria through its deep-water oil, natural gas and solar businesses.
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