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  • Business - Companies
  • Updated: August 23, 2021

Shell Nigeria Loses Oil License

Shell Nigeria Loses Oil License

Royal Dutch Shell Plc’s Nigerian venture lost the right to operate an oil site after a court ruled the company wasn’t entitled to renew a lease first granted in 1989.

This follows the judgment by the Court of Appeal in Abuja on Monday, which upturned a 2019 ruling that granted SPDC the right to renew its operating license for the Oil Mineral Lease 11 (OML 11) field and transferred those rights to the state-owned Nigerian National Petroleum Corporation (NNPC).

“This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians,” Mele Kyari, managing director of NNPC, said in a statement.

Shell was “disappointed” by the judgment and subsequently filed an appeal, a spokesperson for the company said in a statement.

“Though we believe the SPDC JV has fulfilled its obligations under the Petroleum Act for the renewal of OML 11, our preference remains to engage the Nigerian authorities on available options for an amicable resolution of issues around the lease,” the spokesperson said.

The decision comes just as Shell agreed to pay a local community $111 million in a decades-old oil spill dispute related to OML 11. Shell faces lawsuits from Nigeria to Europe claiming environmental damages in the Niger Delta.

It is also coming at the time Shell has announced the commencement of the process of divesting from its onshore operations in Nigeria because it is no longer compatible with the company’s long-term climate strategy and also due to host communities; restiveness.

Shell, which is the operator of the Joint Venture (JV), had not produced a drop of crude oil from Ogoniland for several years and as such no revenue had accrued to the partners throughout this period due to the development.

OML 11 remains one of the most important oil blocks in Nigeria. Located in swampy terrain, it has Port Harcourt in the northwest of the block, while the major yard and logistics base at Onne is sited by the Bonny River.

Kyari said further legal action by Shell would be “futile” given the company’s “inability to work on the Ogoni region of the block for over 30 years.”

An NNPC subsidiary already has taken over the assets, and operations “are in full gear,” according to its statement.

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