Royal Dutch Shell, Nigeria’s biggest oil producer is making moves to cut back on risks involved in carrying out operations in Nigeria and as well commit to its plans to embrace cleaner energy elsewhere.
The Nigerian government runs a joint venture vehicle with Shell called Shell Petroleum Development Company (SPDC) and has been encouraging the company to retain at least onshore operations for now instead of opting for a total exit from the country.
The minister of Petroleum and Natural Resources, Timipre Sylva has said “Nigeria’s talks with Shell include handing over Shell’s stakes in the assets to the Nigerian Petroleum Development Co or NNPC, inviting bids from Nigerian indigenous producers, or having a mixture of local firms and foreign independent producers to bid for the assets”.
He revealed that shells divestment could have a negative impact on the fiscal plan of the Nigerian government as nearly 90 percent of Nigeria’s revenue comes from oil.
Royal Dutch Shell has sold nearly half of its Nigerian investments so far, viewing operations in Nigeria as a “headache” due to endless litigations arising from oil spills, acknowledging that its spill-prone operations there aren’t compatible with plans to go green.
At its annual general meeting, CEO Ben van Beurden said, “We cannot solve community problems in the Niger Delta, that’s for the Nigerian government perhaps to solve. We can do our best, but at some point in time, we also have to conclude that this is an exposure that doesn’t fit with our risk appetite anymore. The company has started discussions with the government on how to move forward.”
While the CEO did not say explicitly that Shell wants to sell the remainder of its oil assets in the Niger Delta, a full retreat is expected with time.