The Nigeria Upstream Petroleum Regulatory Commission (NUPRC) has rejected the proposed $1.3billion sale of Shell’s onshore and shallow-water oilfields to an indigenous oil firm, Renaissance group because the buyer is not qualified to manage the assets.
Shell’s asset sale to Renaissance consortium, which comprises five companies, was first announced in January.
NUPRC CEO, Gbenga Komolafe said in a speech at an event in Abuja that the Shell deal “could not scale (the) regulatory test,” but did not elaborate. Exxon’s transaction was granted ministerial approval.
A Shell spokesperson did not immediately respond to a request for comment, the Newspaper reported.
The rejection is a blow to Shell’s strategy to pivot toward deepwater for future investments and reflects the growing challenges that oil companies face in Nigeria.
International oil companies operating in Nigeria, Africa’s largest oil exporter, have been retreating from onshore operations hampered by theft and sabotage, opting to focus future investments on newer and more lucrative deep offshore fields.
The Shell assets hold a combined estimated volume of 6.73 billion barrels of oil and condensate and 56.27 trillion cubic feet of associated and non-associated gas.
In July, the NUPRC approved the sale of onshore assets by Eni’s local unit to Oando and another from Equinor to new entrant Project Odinmim. Environmental activists and some communities opposed the Shell-Renaissance deal, tying Shell to a string of lawsuits for environmental restoration and compensation for land and rivers damaged by oil spills. In April, NUPRC started evaluating Shell’s divestment to the consortium, which comprises four Nigerian exploration and production companies and an international energy group.