Shell denies $1.3 billion onshore assets sale to Renaissance Consortium, insists on shares transaction

Story highlights

  • Shell clarifies it has not sold its onshore assets in Nigeria to Renaissance Consortium despite previous announcements.
  • The sale in question is said to be a share transaction involving Shell’s shareholder.
  • Legal disputes between Shell and Global Gas and Refining Limited regarding contractual obligations are ongoing, with implications for the divestment process

The Shell Petroleum Development Company of Nigeria Limited (SPDC) has clarified its over $1.3 billion onshore oil assets sale to Renaissance Consortium.

SPDC’s legal team in a counter affidavit in suit number FHC/ABJ/CS/413/2024(dated May 24,2024), exclusively seen by Nairametrics, maintained that it “did not sell its onshore assets and facilities in Nigeria to anyone.”

The submissions by SPDC’s legal team before the Federal High Court, Abuja is coming about six months after its parent company, Shell Plc announced it had reached an agreement to sell its Nigerian onshore oil assets to the local consortium for over $1.3 billion, pending government approval.

SPDC’s counter application is contending a case instituted by Global Gas and Refining Limited against it and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) (as first and second respondents).

Company’s move to stop divestment

The legal team of Global Gas and Refining Limited approached the court with a suit seeking an order restraining NUPRC from “approving, authorising, consenting to or otherwise granting the permission for the sale/divestment of the assets of the (SPDC) 1st Respondent”.

The firm’s Executive Chairman, Mr Kenneth Yelowe, deposed before the court that his company, Global Gas had instituted an arbitral proceedings against Shell, alleging it failed to supply wet gas to it in line with the terms of a Gas Processing Agreement in 15 March 2002.

Yelowe, through his lawyer, Patrick Ikweato (SAN) stated that unless the court grants an order temporarily safeguarding the “assets” in dispute from being sold, its 2002 business deal with Shell may be jeopardized.

The applicant further submitted that the dispute is already before the Supreme Court of Nigeria but the NUPRC is not a party at the apex Court, hence, the need for the trial court to restrain the statutory agency of the Federal Government of Nigeria.

In the event of such a potent scenario, the Applicant will be without any remedy for the settlement of the subsisting dispute over the manifest breach/violation of the 1st Respondent’s obligations to supply Rich Gas to the Applicant as agreed in the GPA dated 15 March 2002.

“The instant Application for the grant of Interim Measure of Protection merely seeks to preserve the Applicants rights against the intended divestment/sale of the SPDC’s onshore facilities as publicly announced by its parent company, Shell PLC.

“Unless by an Order of this Honourable Court as the Competent Judicial Authority, in the likely event of the appeal before the Supreme Court succeeding, the Applicant will be completely helpless/overreached as the Respondent may have been sold and divested.

“I am aware that the dispute between the Applicant and the (SPDC) 1st Respondent over the GPA dated 15 March 2002 is yet to be resolved by Arbitration which is the agreed mode for the settlement of disputes under the Gas Processing Agreement (GPA) dated 15 March 2002,”Yelowe deposed in an affidavit seen by Nairametrics.

Shell counters Global Gas on assets sale

But in its counter affidavit, SPDC’s Legal Counsel, Global Litigation(Sub-Saharan Africa), Mr Kingsley Osuh, 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 to Renaissance is 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 ( 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.

Renaissance brings experience in oil and gas exploration and production in Africa including in the Niger Delta operating environment where four Nigeria-based shareholders of Renaissance all currently operate fields and associated assets and infrastructure in joint ventures with the Nigerian National Petroleum Company Limited, ” he stated, while adding that SPDC remains intact as a corporate entity and is carrying on business within Nigeria as a corporate entity, with all its assets intact.

The share sale transaction did not and will not affect the 1st Respondent’s 30% participating interest in eighteen (18) Oil Mining Leases (“OML”) that are currently part of the 1st Respondent’s Joint Venture, with the 1st Respondent as Operator of the unincorporated Joint venture with Nigerian National Petroleum Company Limited, Total Energies EP Nigeria Limited and Nigerian Agip Oil Company.

“The sale of the shares held by the shareholder of the 1st Respondent’s neither impacts the 1st Respondent’s continued corporate existence as a Nigerian registered company nor its assets, “Osuh.

He added that the applicant’s claims are for liquidated sums, that is, a compensation figure for an alleged breach of contract.

He said if its claim is upheld by the courts, the SPDC, a corporate entity, is capable of paying the compensation.

Back story

In 2021, Shell announced its intention to divest its Nigerian onshore assets due to the incompatibility of its long-term energy transition strategy with the challenges of operations in Nigeria, marked by theft and oil spills.

After a pause in the divestment process in 2022, Shell resumed talks in June 2023 to sell its 30% interest in the joint venture known as SPDC, operating onshore and in shallow-water oil and gas fields.

With President Bola Tinubu’s new administration, which began in May, advisers recommended closing outstanding divestments sought by international oil producers to enhance petroleum output.

Two months ago, NUPRC established a divestment framework to oversee the evaluation of applications for ministerial consent regarding the Shell Petroleum Development Company of Nigeria Ltd. (SPDC) divestment process.

However, civil society groups, led by Amnesty International, have called on the Nigerian government to block Shell Plc’s proposed sale of its onshore oil business in Nigeria.

Renaissance Consortium stated “We are pleased to announce the signing of a landmark transaction with Shell International PLC to acquire its entire shareholding in The Shell Petroleum Development Company of Nigeria Limited (SPDC).

Renaissance,  a company comprised of Petrolin  Group, has been a preferred partner in the petroleum sector, supporting African business opportunities by connecting them with global realities.


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