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    Shell in talks with Nigerian govt on onshore asset sale

Summary

The company has struggled for years with oil theft and pipeline sabotage that have resulted in costly repair work and lawsuits.

by: Joseph Murphy

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Shell in talks with Nigerian govt on onshore asset sale

Shell is in discussions with Nigeria's government to sell its onshore assets in the west African country, after struggling for years with spills caused by pipeline theft and sabotage, CEO Ben van Beurden said on May 18.

"Of course, as you all know, in Nigeria we have faced a consistent environmental challenge… mainly because of leaks caused by sabotage and theft in areas where security is a serious problem," the company boss said at an annual general meeting. "We have been reviewing positions that continue to be challenged from an environmental perspective... and a particular point of attention has been onshore oil in Nigeria."

Van Beurden stressed that Nigeria would remain "an important heartland" for the company, however. "Our intent is to focus our investment on our deep water operations and gas positions." Shell is a partner in Nigeria LNG, which accounts for 7% of global LNG supply. It also has gas distribution assets in the country and is developing oil and gas at the offshore Bonga field.

Shell, Nigeria's biggest oil producer, has a 30% interest in onshore consortium SPDC, whose other members are Nigeria's state-owned NNPC with 55%, Total with 10% and Italy's Eni with 5%. The Anglo-Dutch major netted 156,000 barrels of oil equivalent/day from its interest in the venture last year. But it has struggled for years with spills caused by pipeline sabotage and theft that have resulted in costly repair work and lawsuits, while also undermining the company's environmental rating. The company has already scaled back its onshore operations in Nigeria, halving the number of licences it holds in the past 10 years. 

"But unfortunately, our remaining onshore oil operations continue to be subject to sabotage and theft... despite our efforts to limit and respond to this illegal activity," van Beurden said. "This means that the balance of risk and reward associated with our onshore oil portfolio in Nigeria is no longer compatible with our strategic ambitions. Because of this, we have started discussions with the Nigerian government to align on a way to move forward.

"The federal government is in consultation with the Shell on its divestment plan, although some actually feel that Shell should not hurriedly divest," Nigerian oil minister Timipre Sylva said in a statement.

Van Beurden voiced his concerns about Nigeria at a presentation in October. Since then, a UK court has ruled that it does have jurisdiction over alleged damage done by oil spills in the Delta, overruling a Court of Appeal decision that said it was for Nigerian courts to decide.