Oil giant Shell PLC SHEL is reportedly expected to take care of its old infrastructure in Nigeria before its exit from the country, as per a report on the environmental impact of the activities of multinational companies.
Shell is expected to dismantle the old infrastructure or pay to remove them from the Niger delta, reported Reuters.
In January 2024, the company agreed to sell its Nigerian onshore subsidiary, The Shell Petroleum Development Company of Nigeria Limited (SPDC) to Renaissance, a consortium of five companies.
The consideration payable to Shell as part of the transaction is $1.3 billion, and the buyer will make additional cash payments of up to $1.1 billion, mainly related to prior receivables and cash balances in the business.
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During the deal announcement, Shell said the Renaissance consortium would take over responsibility for dealing with oil spills in the delta.
As per the report, Gbenga Komolafe, head of Nigerian Upstream Petroleum Regulatory Commission, said that oil majors would need to comply with rules on decommissioning before they are granted consent to exit.
Further, SOMO’s executive director, Audrey Gaughran, added, “The big issue is that Shell is leaving onshore Niger delta and leaving behind potentially a massive bill for (clean up).”
However, the government has indicated that it would not block Shell’s sale deal.
Price Action: SHEL shares are up 1.70% at $63.94 premarket on the last check Wednesday.
Photo via Wikimedia Commons
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