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Shell secured the Nigerian government’s approval of a major asset sale in the country by committing to a fresh large-scale investment in the Bonga North field, the Financial Times reported today, citing unnamed sources familiar with both deals.
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The Anglo-Dutch supermajor approved the Bong North deepwater project at the start of this week, with reports putting the total investment in the field at some $5 billion. Bonga North currently has an estimated recoverable resource volume of more than 300 million barrels of oil equivalent and will reach a peak production of 110,000 barrels of oil a day, with first oil anticipated by the end of the decade, the supermajor added.
Three days later, the Nigerian government approved a divestment by Shell that it had been refusing to greenlight for almost a year. Shell wanted to sell onshore and shallow-water assets valued at around $2.4 billion to Renaissance Group but the Nigerian government was against the deal. Now, the FT sources are claiming that the approval of the Renaissance Group deal was contingent on the final investment decision for the Bonga North project.
According to one of the sources, however, the Nigerian government wanted more than just one final investment decision. Rather, they want to make sure Shell will remain in Nigeria as an investor, even after it sells some of its assets there. The sale, one source told the FT, “was important — don’t get me wrong. But it wasn’t just this one deal alone. The conversation was about the larger investment context in Nigeria and how Shell wanted to be a part of that.”
Nigeria has been trying to boost its oil production capacity despite OPEC+ production cuts in order to improve its oil revenue stream. At the same time, Big Oil majors have grown colder towards the West African producer as they have sought less challenging jurisdictions to expand in.
By Irina Slav for Oilprice.com
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Category: News