Nigeria’s decision to halt Shell’s $2.4 billion onshore asset sale to Renaissance Group has drawn concern from foreign investors, as noted by Reuters. This comes at a time when President Bola Tinubu’s administration is actively seeking foreign investment to spur economic growth and enhance Nigeria’s international business profile. Despite these intentions, the government’s recent decision appears at odds with its efforts to attract global investors.
The halted sale follows a similar, prolonged delay with ExxonMobil’s onshore asset transaction to Seplat Energy, which faced a wait of over two years before final approval. Clementine Wallop, a director at Horizon Engage, highlighted the contradictory nature of the government’s actions, noting that while Nigeria voices its readiness for global business, such delays create barriers and impact investor confidence beyond the energy sector.
Foreign investment in Nigeria has been on a decline, with total inflows dropping from $5.3 billion in 2022 to $3.9 billion last year, continuing a downward trajectory that started after the peak investment period five years ago. The pandemic’s effects on oil demand, combined with falling production levels, have further stressed the economy. Shell’s assets, which are underperforming or inactive, would require fresh investment to realize their potential and contribute to Nigeria’s target of 2 million barrels per day, up from the current output of 1.35 million bpd.
The impact of this decision extends beyond the energy sector, as foreign currency shortages and the depreciating naira value have prompted major companies, including Procter & Gamble, GSK, and Bayer AG, to exit or downscale their Nigerian operations. Energy lawyer Ayodele Oni and Shoreline Energy International’s CEO, Kola Karim, stressed that expediting regulatory processes is crucial to fostering investment in oil and gas. The Tinubu administration’s success in attracting foreign investors may hinge on its ability to resolve these regulatory delays, creating a more investor-friendly environment amid Nigeria’s current economic challenges.
