…delay in approving the deal against the intent of growing Indigenous firms
The Nigerian Upstream Petroleum Regulatory Authority (NUPRC) has refuted a report in a national daily that it has approved the $1.3 billion Shell International onshore asset sale in Nigeria to Renaissance Consortium.
The Commission in a statement signed by Olaide Shonola, Head of Public Affairs and Corporate Communications stated that: “The attention of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has been drawn to a publication on September 11, 2024, purporting that the Commission has accepted Shell International Plc’s bid to sell its onshore assets to Renaissance in a transaction worth $1.3 billion.”
“It must be firmly stated that the information contained in the publication did not emanate from the Commission.”
It stated that as part of the Commission’s commitment to transparency and accountability, it will communicate its position on the transaction to the public at the appropriate time.
“Industry stakeholders and the general public are advised to disregard the publication as it is baseless.”
The delay in approving the deal has attracted a reaction from industry operators who felt the act is part of the long-time tactics to deny indigenous companies the opportunity to thrive in the oil and gas industry.
According, Babajide Soyede, former managing director of Warri and Port Harcourt Refineries, in a paper made available on the platform of the Nigerian Academy of Science, titled: “Yet Another Potential Failure To Recognise The Development of Successful Indigenous Enterprise In The Nigeria Oil & Gas Industry ?”
He said: “Nigerian Upstream Petroleum Regulatory Commission, had rejected the agreement by Shell and Renaissance African Energy on the ongoing negotiation on the transfer of shares of Shell in the Onshore Assets of Shell-NNPCL Joint Venture to free Shell to concentrate on Offshore activities exclusively, in accordance with the hitherto much publicized decisions or indications of the intent of Major IOCs to move Offshore. Details of this report could be glimpsed from an earlier posting on this Platform.”
“In the ‘70s, ’80s and even the 90s the Nigerian National Petroleum Corporation and the Department of Petroleum Resources actively promoted the earliest Local Content Policy in the Nigerian Oil & Gas Industry by promoting dynamic and pervasive growth of Enterprise Level Participation of the Indigenous Players in the Industry. This was fostered in many ways, and with the cooperation and collaboration of other relevant Agencies of Government like the Nigerian Immigration
Service. These efforts bore fruits early in the Downstream Sector with Independent Petroleum Marketer growing gradually to now occupy commanding heights in the Sector. Dangote Refinery, of course, has now permanently sealed prominence, if not outright dominance of the Indigenous Sector of the Refining Sector.”
Until now, however, the Upstream Sector has remained in the unrelenting dominance of Foreign Enterprise. I am not at all maligning foreign investment in the Upstream Sector. Such investment is most welcome, and the more the merrier. However, after almost 7 decades of the Industry, dynamic participation of Indigenous Private Enterprise in the Upstream Sector has become almost existential if Nigeria were to realize the strategic vision of NNPC formulated in 1988 that Nigeria should be producing by the years 2000s 4 million barrels per day of Crude Oil and commensurate level of Natural Gas. Needless to say, NNPCs solo efforts in this direction appear permanently stunted.
“This is where Private Sector Ventures like those of SEPLAT and RENAISSANCE AFRICAN ENERGY become existential. NNPCL, as is, cannot alone grow indigenous participation or equity of the Upstream, whilst simultaneously growing the overall capacity remarkably without the collaboration of the pioneer Marginal Field Operators like SEPLAT and the RENAISSANCE AFRICAN ENERGY JV Partners, MD WESTERN, ARADEL, FIRST EXPLORATION, and WALTERSMITH. The PETROLIN GROUP, the fifth partner in the Joint Venture, is an International Group.”
“ The Marginal Field Development Programme innovated by the then Department of Petroleum Resources and NNPC at the beginning of this Century, some twenty years ago, has indeed matured and is yielding entrepreneurs and enterprises innovative and bold enough to begin to compete in the same field with the International Oil Companies.”
“Consequently, I want to proceed to the reasons reportedly adduced for the purported rejection by NUPRC of the agreement by Shell and Renaissance African Energy:
The first one, technological expertise to manage the assets being negotiated, is far from being a deal breaker. On the contrary, all the enterprises in the Renaissance African Energy Group reached the heights they have attained individually based on their technological expertise or amenability to technology expertise. This I can personally confirm through my professional association with ARADEL in the early years of Niger Delta Petroleum Resources, which became ARADEL. In any case, Shell certainly must have satisfied itself about the technological expertise of Renaissance to manage the assets before going ahead with the agreement. Lastly, any new technology required could be acquired on the market, as usual.”
On January 16, 2024, Shell announced that it has reached an agreement to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies comprising four exploration and production companies based in Nigeria and an international energy group.
The five Nigerian companies with footprints in oil exploration and production are; ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin,
The transaction, according to Shell 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)*. SPDC’s staff will continue to be employed by the company as it transitions to new ownership.
Following completion, Shell will retain a role in supporting the management of SPDC JV facilities that supply a major portion of the feed gas to Nigeria LNG (NLNG), to help Nigeria achieve maximum value from NLNG.
“This agreement marks an important milestone for Shell in Nigeria, aligning with our previously announced intent to exit onshore oil production in the Niger Delta, simplifying our portfolio and focusing future disciplined investment in Nigeria on our Deepwater and Integrated Gas positions” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director.
“It is a significant moment for SPDC, whose people have built it into a high-quality business over many years. Now, after decades as a pioneer in Nigeria’s energy sector, SPDC will move to its next chapter under the ownership of an experienced, ambitious Nigerian-led consortium.
“Shell sees a bright future in Nigeria with a positive investment outlook for its energy sector. We will continue to support the country’s growing energy needs and export ambitions in areas aligned with our strategy.”
The SPDC JV is an unincorporated joint venture comprised of SPDC Ltd (30 percent), the government-owned Nigerian National Petroleum Company Ltd. (55 percent), Total Exploration and Production Nigeria Ltd (10 percent) and Nigeria Agip Oil Company Ltd (5 percent).
According to Shell, the completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.
