Shell Plc has resumed negotiations regarding the sale of its stake in a joint venture that operates onshore and shallow-water oil and gas fields in Nigeria. The talks are being held with ND Western Ltd., a local firm, after being put on hold for about a year. The energy giant had announced the pausing of the divestment process in June 2022, pending the outcome of a lawsuit at Nigeria's Supreme Court, which ordered Shell to refrain from selling any assets until the resolution of a dispute with a community in the Niger Delta region regarding alleged pollution.
According to sources familiar with the matter, discussions with ND Western have recently restarted, and substantial progress has been made. However, the outcome is still uncertain, and it is unclear if a transaction will be agreed upon and proceed. It is important to note that the court order for Shell's joint venture, known as SPDC, to maintain the status quo remains in effect, and the country's top court is currently on summer vacation.
Shell has not commented specifically on the ongoing talks but has reiterated its intent to decrease its involvement in onshore oil production in Nigeria while maintaining its positions in deep-water and natural gas sectors of the country. The company has affirmed its respect for the judiciary and the seriousness with which it regards the court order.
ND Western, the local firm involved in the discussions, has declined to comment on the matter.
The decision to sell Shell's 30% stake in the joint venture was initially announced in 2021. The move was part of Shell's long-term energy transition strategy, which deemed its Nigerian operations vulnerable to theft and oil spills. The company's then-CEO, Ben van Beurden, informed shareholders that an increase in sabotage in recent years had led to a state of near-lawlessness, making it challenging for the company to maintain control.
The sale of Shell's stake attracted interest from various local producers, including ND Western, Heirs Oil and Gas Ltd., Seplat Energy Plc, and Sahara Group Ltd., prior to the pause in the process last year.
It is worth noting that Nigeria's new president, Bola Tinubu, assumed office in late May. Prior to his inauguration, his advisors recommended that his administration prioritize concluding outstanding divestments sought by international oil producers in order to boost petroleum output. The outcome of the ongoing discussions regarding Shell's stake in the joint venture will likely be of interest in this context.