Shell considering sale of onshore oil assets in Nigeria. Credit: Anita starzycka / Pixabay.

Royal Dutch Shell has lost the right to operate the Oil Mining License 11 (OML 11) in Nigeria after a court ruled to award the licence to state-owned Nigerian National Petroleum (NNPC).

The ruling by the Appeal Court in Abuja overturns the decision by the Federal High Court, Abuja, issued on 23 August 2019 that said Shell Petroleum Development Company (SPDC) was entitled to the OML 11 licence renewal.

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Shell has not been entitled to renew a OML 11 lease since it was granted the licence in 1989, reported Bloomberg.

The court of appellate held that the Nigerian Minister of Petroleum Resources has rightly exercised its discretion.

The ministry has awarded the OML 11 Lease to NNPC subsidiary Nigerian Petroleum Development Company (NPDC).

NNPC managing director Mele Kyari said: “This is a huge victory for the government and people of Nigeria as we now have the impetus to responsibly unlock the oil and gas reserves the block offers for the benefit of all Nigerians.”

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Shell was quoted by Bloomberg as saying that the firm was ‘disappointed’ by the court of appeal judgment. It has subsequently filed an appeal.

Shell spokesperson was cited by the new agency as saying in a statement: “Though we believe the SPDC JV has fulfilled its obligations under the Petroleum Act for the renewal of OML 11, our preference remains to engage the Nigerian authorities on available options for an amicable resolution of issues around the lease.”

The judgement comes days after Shell agreed to pay $111m to a local community to settle a dispute related to a decades-old oil spill at the OML 11.

Moreover, Shell is considering offloading its onshore oil assets in Nigeria as they do not contribute to its long-term climate strategy.