For $1.3 billion, Shell International Plc intends to sell its onshore Nigerian assets to Renaissance, a group of national and international energy firms. Although President Bola Tinubu, who also holds the position of Minister of Petroleum Resources, has not yet granted final clearance for this transaction, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has granted preliminary approval. The agreement is anticipated to strengthen the naira, increase government revenue, increase oil output in Nigeria, and forward plans for gas development.
With its deep water and integrated gas projects, Shell—which has encountered difficulties as a result of theft, sabotage, and operational problems—will continue to be present in Nigeria. Waltersmith, Petrolin, First E&P, ND Western, and Aradel Energy are members of the Renaissance consortium. With a $7 billion Investment in the Bonga properties, Renaissance hopes to boost production by 300,000 to 500,000 Barrels Per Day (bpd) in three years. The Bonga Southwest project’s development could help Nigeria achieve its objective of increasing output to 3 million barrels per day by adding roughly 1 billion barrels to its reserves.
Environmental problems could persist after assets transfer.
However, Olaide Shonola, the head of NUPRC’s public affairs, disputed that the contract had been formally approved by the commission. The Nigeria LNG project and a number of other Nigerian businesses will not be included in Shell’s onshore sale. A commitment to openness and proper process has been made clear by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which has publicly denied formally authorizing the sale. Olaide Shonola, the NUPRC’s head of public affairs, stressed that once all required reviews and recommendations are completed, any final approval or official attitude will be made public.
Although President Bola Tinubu’s foreign commitments are cited as a possible reason for the approval’s delay, the Office of the President has not yet released an official comment. Shell’s handling of Oil Spills and environmental damage in the Niger Delta has historically drawn criticism from local people and environmental groups. Local activists and groups like Friends of the Earth International have expressed worry that, if not properly managed, the environmental problems could persist after assets are transferred to a new operator.
Nig. is anticipated to gain economically from the $1.3 billion contract.
In order to avoid making the same mistakes as Shell, which include over 1,000 documented oil leaks over the last ten years, largely as a result of Pipeline vandalism and sabotage, experts from the Nigerian Conservation Foundation emphasize the necessity for Renaissance to create strict environmental management plans. Nigeria is anticipated to gain significantly economically from the $1.3 billion contract, including higher oil output and revenues—two essential commodities for an Economy struggling with Inflationary Pressures and a lack of foreign cash. Nigeria’s total output might climb by 20–30% with the predicted 300,000–500,000 bpd increase in oil production, bringing in billions more in money every year.
Risks associated with the purchase include the possibility of employment losses during the transition phase and asset underperformance should Renaissance experience operational difficulties. Shell’s operations in the Niger Delta have historically presented serious environmental and social issues, such as gas flaring, numerous oil spills, and legal conflicts with nearby people. The Bodo oil leak in 2008–2009 is one instance of the expensive fallout from subpar environmental practices, which resulted in a historic $83 million settlement. Renaissance needs to invest in technologies that detect and respond to spills, establish strict safety procedures, and actively include the surrounding community in order to lessen its negative effects on the environment.
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Indicating a strategic focus on lowering carbon Emissions and supporting Nigeria’s “Decade of Gas” strategy, the consortium has committed to investing $7 billion in Bonga assets and gas Infrastructure development. The success of Renaissance in overcoming the environmental and social issues that have beset Shell’s onshore operations, however, will depend on how well these strategies are implemented. Notwithstanding the fact that the sale may help Nigeria’s Oil and Gas Industry overall, regulatory supervision, stakeholder involvement, and efficient management of the transaction’s social and environmental effects are all necessary for its success.