The Federal High Court has scheduled January 22, 2025, as the deadline for Shell Petroleum Development Company of Nigeria Limited (SPDC) and Global Gas and Refining Limited to report on progress in their out-of-court settlement discussions. This arrangement stems from Global Gas’s claim that Shell failed to deliver wet gas per the terms of their Gas Processing Agreement (GPA) dated March 15, 2002.
Justice Inyang Ekwo set the new date after the parties informed the court on Monday that their settlement talks, ongoing since September 23, 2024, are still in progress.
Global Gas has also petitioned the court for an order preventing the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) from “approving, authorizing, consenting to, or otherwise granting permission for the $1.3 billion sale/divestment of the assets of the 1st Respondent (SPDC) to Renaissance Consortium.”
Global Gas’s Executive Chairman, Mr. Ken Yellowe, asserted in court that his company initiated arbitration against Shell, alleging that the oil giant did not fulfill its commitment to supply wet gas under the GPA. Through his legal counsel, Patrick Ikweato (SAN), Yellowe requested that the court issue an order to temporarily safeguard the contested assets, arguing that the sale could undermine their 2002 contract with Shell.
Yellowe explained that the dispute is already before the Supreme Court of Nigeria, but noted that since the NUPRC is not a party in that case, an additional injunction from the trial court is necessary to restrict the federal regulatory agency’s actions. “In the event of such a scenario, the Applicant will be without any remedy for settling the ongoing dispute over the breach of the 1st Respondent’s obligations to supply Rich Gas to the Applicant as agreed in the GPA dated March 15, 2002,” he stated.
Yellowe added in an affidavit, “The instant application for an Interim Measure of Protection merely seeks to preserve the Applicant’s rights against the intended divestment/sale of SPDC’s onshore facilities, as publicly announced by its parent company, Shell PLC.”
Supporting Yellowe’s statement, Celestine Ezeokeke noted in a further affidavit that the NUPRC publicly announced it had initiated due diligence on the potential divestment of SPDC assets, which include approximately 6.73 billion barrels in crude oil and condensate reserves, to Renaissance African Energy Company Limited.
In a counter-affidavit, SPDC’s legal team argued that the company “did not sell its onshore assets and facilities in Nigeria to anyone.” SPDC’s Legal Counsel for Global Litigation (Sub-Saharan Africa), Mr. Kingsley Osuh, informed the court that the Supreme Court is already handling the dispute between SPDC and Global Gas. He clarified that the arrangement with Renaissance is not an asset sale but a share sale transaction, wherein SPDC’s shareholder would sell its shares to Renaissance. Osuh also stated that, should Global Gas’s claims be upheld, SPDC is financially capable of paying any resulting compensation.
At the resumed hearing on Monday, Ikweato updated the court that his client is awaiting Shell’s finalization of settlement terms. Shell’s legal team responded, emphasizing that both parties are committed to achieving an “amicable resolution.”
NUPRC’s counsel, Chikaoso Ojukwu (SAN), requested that both parties keep him informed of settlement discussions. Justice Ekwo then adjourned the case to January 22, 2025, for a “report of settlement” and directed that NUPRC be copied on all correspondence related to the settlement.
In 2021, Shell announced its intention to divest its Nigerian onshore assets, citing operational challenges, including theft and oil spills, which conflicted with its long-term energy transition goals. After pausing its divestment process in 2022, Shell resumed talks in June 2023 to sell its 30% interest in the SPDC joint venture, which operates both onshore and in shallow-water fields.
The new administration of President Bola Tinubu, which took office in May 2023, has been advised to expedite pending divestments by international oil firms to boost petroleum production. Subsequently, the NUPRC established a framework to evaluate applications for the divestment of SPDC assets, including ministerial consent.
Civil society organizations, led by Amnesty International, have since urged the Nigerian government to halt Shell’s proposed sale of its onshore assets. In response, Renaissance Consortium announced it had reached an agreement to acquire Shell’s shareholding in SPDC. NUPRC later confirmed that documents submitted by SPDC were “undergoing due diligence.”
In a statement on September 11, 2024, Mrs. Olaide Shonola, NUPRC’s Head of Public Affairs, denied reports suggesting the Commission had approved Shell’s proposed $1.3 billion sale to Renaissance. In October 2024, NUPRC reportedly rejected the sale, citing Renaissance’s lack of qualifications to manage the assets, as highlighted in a Reuters report.
