British multinational oil and gas company Shell has decided to sell The Shell Petroleum Development Company of Nigeria Limited (SPDC) – which owns onshore oil assets in Nigeria’s Niger Delta region –  to a consortium comprising mostly local energy players ND Western, Aradel Holdings Plc, First E&P, the Waltersmith Group, Petroleum Development Company Limited and Petrolin. The transaction is measured at $1.3 billion, with further payments of up to $1.1 billion set to be made. The sale will come into effect following the relevant approval from government.

As the voice of the African energy sector, the African Energy Chamber (AEC) strongly urges the government to take a fast-tracked approach to approving the deal. Delaying the transaction will only impact the growth of the industry, and Nigeria stands to serve as an example of how the successful transfer of oil assets from an international major to local players can advance the industry.

The SPDC operates and supplies onshore and shallow water oil and gas to domestic and export markets. The company currently supplies about 10% of Nigeria’s domestic natural gas as well as operates a network of 3,173 km of flow-lines and pipelines. SPDC also has 263 producing oil wells, 56 producing gas wells, six gas plants, two major oil export terminals and one power plant. All of these assets are held through its Joint Venture with the Nigerian National Petroleum Corporation, TotalEnergies and the Nigerian Agip Oil Company.

For Shell, the transaction of these assets allows the British multinational to focus its attention on other critical assets within its portfolio. The company is looking at increasing investments in the Bongo and Erha fields – where nearly one-third of the country’s deepwater production is derived. Through the transaction, greater focus, capital and time can be given to these assets, resulting in both a more profitable and productive future for Shell in Nigeria.

“This agreement marks an important milestone for Shell in Nigeria,” Shell’s Integrated Gas and Upstream Director Zoe Yujnovich, explained, adding that the deal is “simplifying our portfolio and focusing future disciplined investment in Nigeria on our deepwater and integrated gas positions.”

Meanwhile, the sale of the SPDC to the local consortium offers several benefits, both for the consortium companies and the country as a whole. In addition to ensuring the continuous development of fields and infrastructure, the acquisition showcases the capacity of domestic Nigerian companies and will lead to enhanced job creation, revenue generation and technology transfer for the consortium itself. SPDC will also benefit from the expertise and experience of the local players, improving risk mitigation and greater social responsibility.

“The AEC strongly urges the government of Nigeria to approve the transaction, thereby transferring the onshore assets into the capable hands of the local consortium. For decades, the Chamber has been promoting the role local energy companies play in Africa’s energy industry and this transaction is a strong testament to this. Local Nigerian companies will lead the next phase of the country’s energy industry transformation and we look forward to the success the consortium will have in the onshore market,” stated NJ Ayuk, Executive Chairman of the AEC.