Financial Energy Review
There are strong indication that the move by Shell International Plc to transfer its $1.3 billion worth of shares from onshore assets to Renaissance may sail through as it receives presidential boost even though the Nigeria Upstream Petroleum Regulatory Commission (NUPRC) is yet to give its approval citing technical and financial capabilities as key to allow the deal to go ahead.
Report said that the transaction which needed the green light from the regulatory commission as required by the Petroleum Industry Act (PIA) has been rejected, according to Africa Report publication.
However, another source maintained that the deal may sail through and chances are 70/30 per cent and with the push by President Bola Tinubu the deal was to close soon.
“I’m not aware of this particular news. This morning, we got information that there is a 70-30 assurance that the sale will go through. “The President is also interested in the sale and wants to ensure that the sale goes through as quickly as possible. This is the information we got this morning” the source said.
Shell in a suit counters Global Gas on assets sale
In its counter affidavit, SPDC’s Legal Counsel, Global Litigation(Sub-Saharan Africa), Mr Kingsley Osuh, had told the court that the dispute between his company and Globus Gas is already before the Supreme Court for final determination.
He added that the transaction with Renaissance was not an asset sale but a share sale transaction whereby the SPDC’s shareholder agreed to sell its shares in the SPDC to a company called Renaissance.
The 1st Respondent (SPDC) is a company, separate and distinct from its shareholder, and the 1st Respondent is not a party to the agreement by its shareholder to sell its shares.
For the avoidance of any doubt, the 1st Respondent did not sell its onshore assets and facilities in Nigeria to anyone – it was only the 1st Respondent’s shareholder that sold its shares in the 1st Respondent to Renaissance.
He affirmed however that the ultimate parent company of the SPDC (Shell Plc), consequently issued a statement published on its official website regarding selling its Nigerian onshore subsidiary (www.shell.com/news-and- insights/newsroom/news-and-media-releases/2024/shell-agrees-to-sell-Nigerian- onshore-subsidiary).
He explained why Renaissance was allowed to purchase the shares of the SPDC’s shareholders.
This is an indication that Shell International Plc had earlier revealed its intention to divest its full stake in the Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium comprising ND Western Limited, Aradel Holdings Plc, the Petrolin Group, FIRST Exploration and Petroleum Development Company Limited, and Waltersmith Group.
In April, the NUPRC established a divestment framework to evaluate applications for ministerial approval of Shell’s divestment plans.
Gbenga Komolafe, NUPRC’s CEO, highlighted that this framework covers areas such as technological expertise, financial standing, legal requirements, decommissioning and abandonment procedures, environmental remediation, labour and industrial relations, data repatriation, and host community trust.
He also emphasised that Renaissance must prove it has the technical capability to efficiently manage the assets in question.
Between January and August 2024, the deal’s value dropped from $2.4 billion to $1.3 billion.
These assets have been at the centre of a legal dispute between Shell and local firm Global Gas and Refining Limited, which has sought a court injunction to prevent NUPRC from endorsing the sale. Local reports suggest both companies have several disagreements over contractual responsibilities.
In response to Global Gas’ objections, Shell clarified that it was not selling the onshore assets directly to Renaissance for $1.3 billion but was transferring shares.
Meanwhile, a coalition of 40 NGOs, including Amnesty International, raised concerns over the transaction, urging that the sale not be approved until Shell’s environmental damage has been thoroughly assessed.onshore
In the same vein, the Petroleum and Natural Gas Senior Staff Association of Nigeria rejected the sale of Shell assets, saying the consortium, Renaissance, was unknown to it coupled with several allegations.
