Setback for Shell’s $2.8b divestment as host communities claim N500b damages
The challenges facing the $2.8 billion divestment of the assets of Shell Petroleum Development Company Nigeria Limited to a group of Nigerian organisations appear to be embroiled in another legal battle with over 1,216 host communities’ residents claiming damages of N500 billion.
This comes as the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) yesterday, said approval for the sale of the asset has not been granted as reported in some sections of the media.
A court document seen by The Guardian yesterday filed on behalf of the Ilaje Communities in Ondo State demanded Shell Nigeria, Shell International Plc and Renaissance Africa Energy Company Limited to pay N500 billion as damages for breach of a subsisting Mareva injunction granted by the Federal High Court, Akure on September 28, 2023, restraining Shell from disposing its assets in Nigeria until the conclusion of the case.
The claimants, through their lawyers, Mohammed Ndarani Mohammed, claimed that the recent transaction between Shell and Renaissance is a clear breach of the injunction, and they are seeking a perpetual injunction restraining Shell, Renaissance and any other intending investors from entering any further negotiations towards the disposal of the said assets in breach of the injunction.
Shell’s SPDC JV, which operates 15 onshore and three shallow-water oil mining leases in Nigeria had earlier this year moved to sell its assets to Renaissance, a consortium of ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
The deal is valued at $1.3 billion, with an additional $1.1 billion in potential payments related to receivables and cash balances. The net book value of the assets is $2.8 billion as of December 31, 2023, and further contingent payments were expected depending on business performance and product price fluctuations.
Since the announcement, the International Oil Company has faced a series of attacks with local and international organisations calling for remediation to environmental issues caused by the company before allowing the divestment of the asset.
The case, filed at the Federal High Court in Abuja with number FHC/ABJ/cs/1300/2024, the host communities, which said they are fish farmers, noted that they suffered a great loss of properties due to the incessant incidents of oil spillage occasioned by ruptured pipelines belonging to Shell.
The community prayed the court to order Shell to within 48 hours of the delivery of judgment in this suit, pay the sum of N500 billion as damages and another N5 billion as the cost of prosecuting the suit and legal representation.
NUPRC, in a statement issued by its Head, Public Affairs and Corporate Communication Olaide Shonola denied approving the divestment.
“As part of the commission’s commitment to transparency and accountability, it will communicate its position on the transaction to the public at the appropriate time,” it stated.
