The CEO of Royal Dutch Shell, Ben van Beurden, has announced plans to sell off the company’s onshore stakes in Nigeria.

The Anglo-Dutch oil exploration company which began operations in Nigeria as far back as 1936 have now sighted costly repair operations, sabotage, vandalism of pipelines and high profile, costly lawsuits as reasons for its exit from onshore operations.

“We cannot solve community problems in the Niger Delta, that’s for the Nigerian government perhaps to solve. We can do our best, but at some point in time, we also have to conclude that this is an exposure that doesn’t fit with our risk appetite anymore,” van Beurden said.

“We’ve drawn that conclusion, and we’re now talking to the Nigerian government on the way forward.” CEO Ben van Beurden said while speaking at the company’s annual general meeting on Tuesday, May 18 2021.

Nigerian Oil Minister, Timipre Sylva has confirmed the federal government was in talks with Shell on how to divest its onshore stakes.

“The sides are considering transferring the stakes to SPDC or another local company or selling it to a foreign company,” Sylva said in a statement.

In February, a Dutch court held Shell’s Nigerian subsidiary responsible for multiple oil pipeline leaks in the Niger Delta and ordered it to pay unspecified damages to farmers, leading van Beurden to call its Nigerian onshore assets a “headache”.

Last year Shell also lost a Nigerian high court case that could lead to $44 million in damages for spills.

Shell’s Nigerian onshore joint venture SPDC has sold about 50% of its oil assets over the past decade. Shell’s stake in SPDC gave it 156,000 barrels per day of oil equivalent in 2020, of which 66,000 barrels was oil.

Is Shell Leaving The Nigerian Market?

Contrary to what is been reported in local news, Shell is not exiting the Nigerian market just yet.

Speaking to an employee present at the meeting (name withheld on request), the move would only affect onshore operations.

Shell would continue to maintain and focus on its offshore operations. The Shell Nigeria Exploration and Production Company (SNEPCO) would continue to operate offshore with its two deep-water licenses.

What This Means For Nigerian Employees Of Shell

While no immediate retrenching has been recorded, it is very possible that downsizing in staff capacity is in view as the same staff power would not be needed if the company follows through with its new plans.