Nigeria govt in talks with Shell over planned onshore divestments

London, (Quantum Commodity Intelligence) - Nigeria's government is considering its options regarding energy major Shell's planned divestment of onshore operations in the country, ranging from a takeover by state-owned Nigerian National Petroleum Corporation (NNPC) to involving foreign independent companies.

However, government discussions with the energy giant are also ongoing regarding maintaining a stake in the country's oil industry.

"Some actually feel that Shell should not hurriedly divest and to at least stay...where Shell has completely divested from a sector is not good for us," said Minister of State, Petroleum Resources Chief Timipre Sylva.

Shell's leadership view its ongoing involvement in the sector there, where it has been involved in a number of legal battles with local communities after pipeline spills, as out of sync with its energy transition goals.

"The balance of risks and rewards associated with our onshore portfolio is no longer compatible with our strategic ambitions," Chief Executive Officer Ben van Beurden told an investor meeting Tuesday.

"We cannot solve community problems in the Niger Delta."

Shell has been gradually selling off its Nigerian assets over the last decade due to these problems, cutting the number of its onshore licences by around 50%.

The Shell Petroleum Development Company of Nigeria (SPDC) produces around 39% of the nation's oil with operations concentrated in the Niger Delta consisting of more than 1,000 wells and 6,000 km of pipelines and flowlines.

The SPDC is the operator of a joint venture involving the NNPC, which holds 55%, Shell with 30%, Total Exploration and Production Nigeria Limited with 10% and Nigerian Agip Oil Company limited 5%.