Shell's attempt to sell $2.4 billion in Nigerian onshore assets has stalled after the nation's upstream regulator blocked the sale to the Renaissance consortium. This highlights Nigeria's complicated regulatory environment, potentially discouraging foreign investment in its oil industry.

What does this mean?

Shell is navigating Nigeria's notorious regulatory challenges, much like Exxon Mobil did before its $1.3 billion sale to Seplat Energy was approved - a process that took over two and a half years. This delay adversely affects Nigeria's efforts to attract foreign investments, a key part of President Tinubu's agenda. Foreign investment plummeted from $5.3 billion in 2022 to $3.9 billion last year, exacerbated by the pandemic's impact on oil demand. Shell's blocked sale indicates more than just a delay; these onshore assets require upgrades for Nigeria to reach its oil production target of 2 million barrels per day, up from the current 1.35 million.

Nigeria's challenge with sluggish regulatory approvals is hindering its strategy to draw foreign investments amid currency devaluation and multinational withdrawals. The naira's decline and foreign currency shortages have impacted firms like P&G and GSK, leading them to reassess local operations. Analysts highlight that addressing bureaucratic bottlenecks and corruption could unlock substantial investment, especially as new policies allow oil firms to spend up to $10 million on projects without tender requirements.

For markets: Prospects persist in Nigeria's oil landscape.

Despite these obstacles, some investors perceive growth opportunities. Seplat Energy's new assets are set for rapid production increases once operational issues are ironed out. These investments, along with recent government measures such as raising spending caps to speed up project timelines, indicate potential paths for rejuvenating Nigeria's oil sector.