Shell Says Awarded $1.98 Billion Contracts to Nigerian Firms in 2023

Shell PLC’s units in Nigeria awarded $1.98 billion worth of contracts to local businesses last year, up three percent compared to 2022, the British oil giant has reported.

“Several benefitting companies had taken advantage of the patronage to expand their operations and improve their expertise and financial strength”, a company press release said.

The contracts were awarded by Shell Petroleum Development Company of Nigeria Ltd. (SPDC), Shell Nigeria Exploration and Production Co. Ltd. (SNEPCo) and Shell Nigeria Gas.

"Shell companies execute a large proportion of their activities through contracts with third parties, and Nigeria-registered companies have been key beneficiaries of this policy aimed at powering Nigeria’s progress”, said Olaposi Fadahunsi, business opportunity manager for SNEPCo's Bonga South-West Aparo Project.

“Nigerian content will continue to be an important part of Shell operations”, Fadahunsi added.

Nigeria was the top recipient of Shell’s payments to governments last year, accounting for $4.9 billion of $67 billion paid to 26 countries where Shell had upstream operations, the company said earlier.

“We paid $14 billion in corporate income taxes and $6 billion in government royalties, and collected $47 billion in excise duties, sales taxes and similar levies on our fuel and other products on behalf of governments”, Shell said.

The bulk of Shell’s payments to Nigeria consisted of royalties at $727.9 million.

Shell last year pledged $6 billion in investment in the West African country, the bulk of which is for the expansion of the Bonga oil field project, according to a statement by President Bola Tinubu December 7, 2023, issued after a meeting in Nigeria with company representatives.

Shell, however, is working to exit Nigeria’s onshore. On January 16 it announced an agreement to divest SPDC to local consortium Renaissance Africa Energy Co. Ltd. However, it has failed to get regulatory clearance to close the transaction. On November 3, 2024, Financial Times reported Shell continued to engage with Nigerian authorities.

SPDC operates the SPDC JV, which holds 15 onshore oil mining leases (OMLs) and three shallow-water OMLs that have been plagued by oil spills. Shell says these spills have been mainly caused by oil theft and sabotage.

TotalEnergies SE has also entered a transaction to sell its 10 percent stake in the SPDC JV, as announced by the French company July 17, 2024.

Nigerian National Petroleum Co. Ltd. is the majority owner of the SPDC JV with 55 percent. Shell owns 30 percent. Eni owns the remaining five percent through Nigerian Agip Oil Co. Ltd. (NAOC); the Italian state-controlled company recently completed the divestment of NAOC but has decided to retain the SPDC JV stake.

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