The international oil corporation Shell has announced a landmark decision to divest its onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC), to a consortium named Renaissance. This pivotal move signifies a shift in the tides of the country’s energy sector, carrying profound implications for all involved.

The Renaissance consortium, a formidable amalgamation of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin, is poised to usher in a new era in the Nigerian oil and gas industry. With a wealth of collective experience and resources, this collaboration stands as a powerhouse that is primed to shape the future of oil production in the region.
As the dust settles on this historic transaction, the landscape of Nigeria’s onshore oil fields is set to undergo a significant transformation. With the mantle of responsibility passing to the Renaissance consortium, the industry is braced for a wave of innovation, progress, and change.
It’s important to note that the completion of the transaction is subject to approvals by the Federal Government of Nigeria and other conditions.
In a statement obtained by Vanguard, Shell stated, “Transaction will preserve SPDC’s operating capabilities for the benefit of the joint venture. The transaction 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.
Commenting on the deal, Shell’s Integrated Gas and Upstream Director, Zoë Yujnovich, said, “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.
“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 a joint venture made up of SPDC Ltd (30%), Nigerian National Petroleum Corporation (55%), Total Exploration and Production Nigeria Ltd (10%), and Nigeria Agip Oil Company Ltd (5%).
According to Shell, “The SPDC JV holds 15 oil mining leases for petroleum operations onshore and 3 for petroleum operations in shallow water in Nigeria. It is operated by SPDC.
“The consideration payable to Shell as part of the transaction is US$1.3 billion. The buyer will make additional cash payments to Shell of up to US$1.1 billion, primarily relating to prior receivables and cash balances in the business, with the majority expected to be paid after the transaction.
“The amounts above will be adjusted to reflect any shareholder distributions, above US$200 million, made prior to completion. Other contingent payments, including those related to gas supply to NLNG, may become payable depending on business performance and the fluctuation of product prices.
“The net book value of the entity subject to this transaction is approximately US$2.8 billion as of December 31, 2023. Under the agreed-upon deal structure, economic performance accrues to the buyer with effect from December 31, 2021 (the effective date). However, Shell will continue to consolidate SPDC until control transfers are completed.
“Although any amounts will depend on the future financial performance of the business, we expect to recognise impairments in respect of the business up to the date of completion, including to the extent that the net book value of SPDC exceeds the expected consideration at completion.

“At closing, Shell will provide secured term loans of up to US$1.2 billion to cover a variety of funding requirements. Shell is providing additional financing of up to US$1.3 billion over future years to fund SPDC’s share of the development of the SPDC JV’s gas resources to supply feedgas to NLNG and its share of specific decommissioning and restoration costs.

“This additional financing will only be drawn down when these costs are approved and incurred by the SPDC JV.”
In conclusion, the SPDC joint venture is really important for the oil and gas industry in Nigeria. It brings together different groups to work together and help the country’s economy grow. They focus on being safe, taking care of the environment, and doing their work really well. The SPDC joint venture is all about working together and making a big difference in Nigeria’s energy industry.

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