ABUJA (Reuters) – Nigeria has blocked Shell’s (LON:) sale of its entire onshore and shallow-water oil business but approved a similar deal Exxon Mobil (NYSE:), the national oil regulatory authority reported on Monday.
The sale of Shell assets for up to $2.4 billion to a Renaissance consortium of five companies was first announced in January. Exxon’s deal with Seplat Energy has been awaiting regulatory approval for more than two years since the $1.28 billion fee was announced in February 2022.
In a speech at an event in the capital Abuja, Nigerian Petroleum Regulatory Commission (NUPRC) director-general Gbenga Komolafe said the Shell deal “cannot scale the regulatory test” but did not provide any details. The Exxon deal has received ministerial approval.
President Bola Tinubu signaled on October 1 that the Exxon-Seplat deal would be approved by the ministry within days of regulatory approval.
“We welcome the regulatory announcement and look forward to formally receiving ministerial approval as we work to complete the sale,” Exxon said in a statement.
A Shell spokesman did not immediately respond to a request for comment.
The refusal is a blow to Shell’s strategy to move towards deepwater futures and reflects the growing challenges facing oil companies in Nigeria.
Major oil giants operating in Nigeria, Africa’s biggest oil exporter, are withdrawing from onshore operations hampered by theft and sabotage, opting to focus future investment on newer and more lucrative deep sea deposits.
Shell’s assets include a total estimated volume of 6.73 billion barrels of crude oil and condensate and 56.27 trillion cubic feet of associated and unrelated gases.
Under the agreement, Exxon Seplat will own 40% of four oil production leases and related infrastructure, including the Qua Iboe export terminal and 51% of the Bonny River liquids recovery facility, which was previously owned by Mobil Producing Nigeria Unlimited, a local unit of Exxon.
In trying to exit the oil-rich Niger Delta, Shell follows Exxon Mobil, TotalEnergys (EPA:) and Eni, which wanted to do so for safety reasons.
The NUPRC approved the sale of onshore assets by Eni’s local unit to Oando in July and the sale of onshore assets by Equinor to recent entrant Odinmim.
Environmental activists and some communities opposed the Shell-Renaissance agreement, tying Shell to a series of lawsuits seeking environmental restoration and compensation for land and rivers damaged by oil spills.
In April, NUPRC began assessing Shell’s divestiture of a consortium consisting of four Nigerian exploration and production companies and an international energy group.
