· Royal Dutch Shell’s plans to sell off its onshore and shallow water assets, being managed by its Nigerian unit,the Shell Petroleum Development Company (SPDC) has run into trouble.
· With the severe dollar crunch facing the country Nigeria’s lenders may not be able to fund clients seeking to acquire the oil assets put on sale by the International Oil Company (IOC).
Royal Dutch Shell’s plans to sell off its onshore and shallow water assets, being managed by its Nigerian unit,the Shell Petroleum Development Company (SPDC) has run into trouble. With the severe dollar crunch facing the country Nigeria’s lenders may not be able to fund clients seeking to acquire the oil assets put on sale by the International Oil Company (IOC).An estimated $2.3 billion is needed to purchase the Shell assets.
Guaranty Trust Bank Chief Executive Officer, Segun Agbaje said that the deal would require syndication of up to $1.8 billion, and raising that much of fund locally at the moment is difficult as Nigerian banks currently lack dollar liquidity. Nigeria faced severe pressure on its foreign reserves due to the global slump in crude prices and economic meltdown caused by coronavirus.
Shell had announced in May this year that its onshore operations in Nigeria’s oil and gas industry were no longer compatible with its long-term climate strategy, to slash emissions and turn towards cleaner energy. Last year Shell pledged to transform itself into a clean energy giant and achieve net-zero carbon emissions by 2050 by winding down its oil and gas business . The community issues in the Niger Delta also posed a huge challenge for the company. Local communities in the Niger Delta have challenged that Shell cannot abandon the area after years of degrading their farming and fishing environment. They are demanding that compensation must be paid before the company’s planned exit. A Dutch court also held Shell’s Nige that caused extensive damage and ordered it to pay compensation to farmers.
