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July 1, 2022

Shell defers plans to divest Nigerian onshore oil assets

The sale process will not resume until the country's Supreme Court pronounces a verdict on the 2019 oil spill case.

Shell subsidiary Shell Petroleum Development Company of Nigeria (SPDC) has suspended plans to offload its onshore oil assets in Nigeria, reported Reuters.

The move forms part of a Supreme Court ruling, which requires Shell to wait for the result of the 2019 oil spill appeal.

SPDC managing director and Shell’s country chair Osagie Okunbor said: “The Shell Petroleum Development Company of Nigeria complies with the law, including any court orders, and respects the judiciary and its role in upholding the rule of law.”

The London-based company said in a statement: “The Shell Group has confirmed separately that it will not progress the divestment of its interest in SPDC until the outcome of SPDC’s appeal.”

On 16 June 2022, Nigeria’s Supreme Court maintained a lower court ruling, which prevented Shell from selling its Nigerian assets until a dispute is resolved over a lower court decision to award compensation to the Niger Delta community over the 2019 oil spill.

In November 2020, a Federal High Court ordered Shell to pay $1.95bn in compensation to 88 communities of Egbalor Ebubu in the Rivers state. These communities accused Shell of an oil spill that damaged their waterways and farms, although the company denies the allegations.

Shell appealed the Federal High Court’s order.

Shell is looking to divest its 30% stake in onshore oil and gas joint venture SPDC but continues to invest in gas production assets.

“However, such investment will require a stable and competitive investment climate,” reported the news agency, quoting Shell.

The state’s Nigerian National Petroleum Corporation (NNPC) holds a 55% stake in SPDC while TotalEnergies and Eni own 10% and 5% interests, respectively.

Okunbor added: “SPDC will continue to comply with the Supreme Court’s order to maintain the status quo. We have a strong belief in the merits of our case, which we are vigorously defending.”

Last month, Shell announced that it had won the rights to deepwater block OFF-7 and shallow-water block OFF-2 from ANCAP.

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