Oil & Gas

Shell has gained approval from the Nigerian government for a long-delayed asset sale by committing to a substantial new investment in the country’s oil sector. The Anglo-Dutch energy giant plans to invest $5 billion in the Bonga North deepwater oil project, which is expected to deliver significant production gains. This development was reported by the Financial Times, citing sources familiar with both transactions. The Bonga North field holds over 300 million barrels of recoverable resources and is projected to reach peak production of 110,000 barrels of oil per day, with first oil expected by the end of the decade.

This investment comes alongside Shell’s divestment of onshore and shallow-water assets valued at $2.4 billion to Renaissance Group. The Nigerian government, which had been withholding approval for the sale for nearly a year, finally greenlit the deal three days after Shell confirmed its commitment to the Bonga North project. According to FT sources, the approval hinged on the supermajor’s assurance of continued investments in Nigeria, highlighting the government’s priority of fostering long-term collaboration with foreign oil companies.

The Nigerian government reportedly sought more than just one investment decision from Shell. According to sources, officials wanted assurances that Shell would remain a key player in Nigeria’s oil industry despite selling some of its assets. "The sale was important, but the larger conversation focused on Shell's role in Nigeria's broader investment landscape," a source told the Financial Times. This reflects the government’s strategy to ensure continued foreign investment amidst challenges in maintaining oil output.

Nigeria has been striving to enhance its oil production capacity to boost revenue, even as OPEC+ production cuts persist. However, global oil majors like Shell have become increasingly cautious about operating in the region due to its complex and challenging environment. The agreement between Shell and the Nigerian government signals a potential path forward for collaboration, balancing the interests of foreign investors and Nigeria’s economic ambitions.