Royal Dutch Shell does not see its upstream oil operations in Nigeria as compatible with its strategy to become a net-zero energy business, chief executive Ben van Beurden said at the supermajor’s annual general meeting on Tuesday.
“The balance of risks and rewards associated with our onshore portfolio is no longer compatible with our strategic ambitions,” van Beurden told shareholders, as carried by Bloomberg.
“We cannot solve community problems in the Niger Delta,” said the top executive at Shell, which has encountered numerous problems in Nigeria’s onshore in recent years, including oil theft and pipeline sabotage, as well as lawsuits brought up by local communities over oil spills.
Shell has launched talks with the Nigerian government on how to proceed with its onshore operations in OPEC’s largest African oil producer, van Beurden said, without specifying whether or when Shell would want to divest its oil assets in Nigeria.
Earlier this year, van Beurden said that persistent issues with theft and sabotage in the Niger Delta could prompt Shell to take a hard look at its operations onshore Nigeria.
“Our onshore oil position, despite all the efforts we put in against theft and sabotage, is under challenge,” van Beurden told reporters in February, as carried by Reuters.
“But developments like we are still seeing at the moment mean that we have to take another hard look at our position in onshore oil in Nigeria,” Shell’s top executive added.
A week earlier, The Hague Court of Appeal ordered Shell to compensate Nigerian farmers for two oil spills in the country 13 years ago, in the first lawsuit in which a company had been held liable in the Netherlands for its actions abroad.
The ruling of the Dutch court is setting a precedent for future lawsuits brought against oil firms in the countries where they are based, instead of the countries where oil spills or oil pollution has allegedly taken place.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.