Nigeria’s decision to block Shell from selling its $2.4 billion onshore assets to the Renaissance Group has raised concerns among foreign investors, as reported by Reuters. President Bola Tinubu has been actively trying to attract foreign investment in Africa’s most populous country, but the refusal to approve this deal signals a lack of commitment to encouraging investment.
Reuters highlighted that a similar sale by ExxonMobil to Seplat Energy faced a lengthy approval process, taking over two and a half years. Clementine Wallop, director for sub-Saharan Africa at Horizon Engage, commented on the contradiction between the government’s intentions to improve the business environment and the delays in approval processes, which hinder the Tinubu administration’s investment initiatives.
As Nigeria’s economy struggles to rebound from the pandemic and low oil demand, foreign investment inflows fell to $3.9 billion last year, down from $5.3 billion in 2022. This decline continues a downward trend that began five years ago, when investment peaked at $24 billion.
The assets Shell aimed to sell are underperforming or inactive but could benefit from new investment. The government asserts that increasing oil production—currently below 1.35 million barrels per day against a target of 2 million—could alleviate dollar shortages.
The devaluation of the naira and foreign currency scarcity have prompted multinational companies like Procter and Gamble and Bayer AG to exit Nigeria or seek local partners for distribution.
Ayodele Oni, an energy lawyer at Bloomfield Law Practice, emphasized the need for Nigeria to expedite regulatory approvals to attract more investment in the oil and gas sector. SoKola Karim, CEO of Shoreline Energy International, noted that the assets acquired by Seplat are “low-hanging fruit” that could quickly enhance production levels.
Peoplesmind
