Nigeria blocks Shell asset sale, approves Exxon-Seplat deal

Nigeria has halted Shell's (SHEL.L) plan to sell its entire onshore and shallow-water oil operations while approving a similar transaction between Exxon Mobil (XOM.N) and Seplat Energy (SEPLAT.LG), according to the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) on Monday.

The proposed Shell sale, valued at up to $2.4 billion, was initially announced in January, involving the Renaissance consortium, which includes five companies. Meanwhile, the Exxon-Seplat deal, worth $1.28 billion, has been awaiting approval for over two years since its announcement in February 2022.

Gbenga Komolafe, CEO of NUPRC, explained during an event in Abuja that Shell's transaction "did not meet regulatory requirements," without providing further details. However, Exxon's deal received ministerial consent.

President Bola Tinubu hinted on October 1 that the Exxon-Seplat deal was on track for approval after gaining the regulator's clearance. Exxon confirmed this, stating: "We welcome the regulator's decision and are eager to receive formal ministerial consent as we finalize the sale."

Shell has not yet commented on the matter. The decision marks a setback for Shell's shift toward deepwater investments, highlighting the increasing difficulties oil companies face in Nigeria.

Nigeria, Africa’s largest oil exporter, has seen several oil majors retreat from onshore operations due to theft and sabotage, with firms like Shell shifting focus toward deepwater ventures, which promise greater returns. Shell’s Nigerian assets include 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of natural gas.

Under the Exxon-Seplat agreement, Seplat will acquire a 40% stake in four oil mining leases and related infrastructure, including the Qua Iboe export terminal and a majority share in the Bonny River natural gas liquids recovery plant, previously owned by Mobil Producing Nigeria Unlimited, Exxon's Nigerian subsidiary.

Shell's attempt to exit the oil-rich Niger Delta mirrors the moves of other oil giants such as Exxon Mobil, TotalEnergies, and Eni, who have sought to reduce their onshore presence in the region due to security concerns. In July, the NUPRC approved the sale of Eni’s onshore assets to Oando and another deal between Equinor and newcomer Project Odinmim.

However, Shell's divestment plans faced opposition from environmental groups and local communities, who have linked the company to environmental damage caused by oil spills. In April, the NUPRC began assessing Shell’s sale to the Renaissance consortium, which includes four Nigerian oil exploration companies and an international energy firm.