Nigeria’s decision to stop Shell (SHEL.L) from selling its $2.4 billion onshore assets to Renaissance Group has sent a negative signal to foreign investors, according to Reuters.
The agency noted that Bola Tinubu has been seeking to woo foreign investment as Africa’s most populous country, adding that by declining to approve the deal with the Renaissance, dominated by local firms, Nigeria has sent wrong signals to the global community.
The agency noted that a similar deal by ExxonMobil to sell onshore assets to Seplat Energy was approved, but only after a wait of more than two and half years.
It quoted Clementine Wallop, director for sub-Saharan Africa at political risk consultancy Horizon Engage as saying: “On the one hand, you have a government that says we’re open for business. We want to improve the ease of doing business. We want to engage with the world’s largest energy investors, and on the other hand, there have been these long delays to the approvals.
“The delays have been an impediment to the success of the Tinubu regime’s big investment push. It has had an effect outside the energy industry as well.”
According to Reuters, “As Nigeria’s economy has failed to recover from the shock of the pandemic and its impact on oil demand, total foreign investment inflows fell to $3.9 billion last year from $5.3 billion in 2022, data from the National Bureau of Statistics showed. That continued a downward trend that started five years ago when investors pumped in $24 billion.
“The oil assets Shell is selling are either producing below capacity or not producing at all, but would be boosted by investment.
“The government says boosting oil production – which remains below 1.35 million barrels of oil per day (bpd) against a target of 2 million bpd – would help to ease dollar shortages.
“The lack of foreign currency and plunge in the value of the naira has led multinational companies beyond oil, including Procter and Gamble, GSK Plc and Bayer AG, to either leave Nigeria or appoint third parties to distribute their products.”
“I believe that the country needs to do more to attract investments in the (oil and gas) sector. One of such is improving the speed at which regulatory approvals are granted,” Ayodele Oni, energy lawyer and partner at Lagos-based Bloomfield Law Practice said.
SoKola Karim, Chief Executive Officer, CEO of power and energy group Shoreline Energy International, which has operations in Nigeria, said the assets bought by Seplat were “low hanging fruit” which could quickly be turned around to boost production.
