Afrigather The delayed divestments by worldwide oil corporations (IOCs) from Nigeria’s oil and gas sector is creating uncertainty amongst traders, a growth that doesn’t bode nicely for the nation’s troubled oil sector.
For greater than a decade, oil majors operating in Nigeria have pursued divestment methods, specializing in exiting the shallow water and onshore whereas sustaining pursuits within the deep waters and downstream sectors.
The complexities surrounding abandonment, decommissioning and the surge in environmental points, authorized crises, labour conflicts, vandalism, capital and technical challenges for Nigerian corporations are upsetting stakeholders.
“The present standing the place the sellers have signalled a full intention to depart, whereas the consumers are but to successfully take over the operations of the belongings could be very detrimental to the sector and the nation,” Abdulrazaq Isa, chairman of Unbiased Petroleum Producers Group, mentioned on Tuesday on the opening session of the seventh version of the Nigerian Worldwide Power Summit in Abuja.
“The business shall be most appreciative of the immediate intervention of the federal government to untangle all points and diligently fast-track all related approvals,” he mentioned.
Seplat Power introduced an settlement in February 2022 for the acquisition of ExxonMobil’s complete share in its shallow water enterprise — Mobil Producing Nigeria Limitless (MPNU).
However greater than two years later, the federal government has not authorised the deal, as such transactions are sometimes topic to ministerial consents and different regulatory greenlights.
Additionally, Oando, in September 2023, disclosed that it had signed a deal to amass 100% of Eni’s shares in Nigerian Agip Oil Firm Restricted (NAOC Ltd).
Days after Oando introduced the deal, the Nigerian Nationwide Petroleum Firm (NNPC) Restricted mentioned it might result in authorized points, including that Eni and Oando missed sure phrases of their joint working settlement.
Norwegian oil firm Equinor introduced late final November that it had offered its Nigerian entity to a little-known native firm Chappal Energies, the tip of Equinor’s three-decade affiliation with Africa’s largest oil producer.
“Divestment is being dealt with rigorously by this authorities to make sure the nation stays globally aggressive,” Heineken Lokpobiri, minister of state for petroleum sources (oil) mentioned on the occasion.
“All the problems with divestment will quickly be resolved inside a really brief time period,” Lokpobiri added.
Mele Kyari, the group chief govt officer of NNPC Restricted, mentioned the state-owned firm will facilitate the sale of any belongings in Nigeria, nonetheless, all exits should be mutually helpful to exiting companions, incoming companions and NNPC Restricted.
“It’s not sufficient to exit; each association should assure incremental manufacturing from these belongings and we should see this on the desk. We’re working with all our companions to make sure extra sources are optimally utilised,” Kyari mentioned.
“The president has given a transparent directive that Nigeria’s enterprise setting should be pleasant for funding and anybody who needs to divest is free to divest,” he added.
Different business stakeholders and watchers mentioned delayed oil majors’ exits might restrict the power of the sector to draw contemporary investments.
“World traders at all times require an exit choice. When this seems muddied, it’s one other headwind for brand spanking new traders to contemplate,” Kunle Agboola, an funding threat analyst working in sub-Saharan Africa, informed Businessday.
“Essentially the most engaging oil and fuel basins have nice deal stream but when it takes three years to exit, this can be a vital draw back to funding,” he added.
Findings by BusinessDay confirmed part 95 subsection 10 of the Petroleum Trade Act states that “the place the applying for an project or a switch of a petroleum prospecting licence or petroleum mining lease is refused, the fee shall inform the applicant of the explanations for the refusal and should give affordable time inside which additional representations could also be made by the applicant or by third events in respect of the applying”.
“By preventing onerous to scuttle IOCs’ quest to depart the onshore and shallow waters the place their operations are threatened by oil thieves, whom the federal government and the regulators have didn’t curb, the federal government is proving their case that Nigeria is unsafe for investments,” Agboola mentioned.
Aisha Mohammed, an power analyst on the Lagos-based Heart for Growth Research, argued that it was in Nigeria’s curiosity to have a thriving power sector, significantly at a time when traders desire different locations.
“For instance, Nigeria is the one main oil producer the place the IOCs are leaving regardless of the specter of power transition. Globally underinvestment into oil tasks is difficult however it’s worse in Nigeria,” Mohammed mentioned.
ExxonMobil is investing thousands and thousands of {dollars} in Guyana the place the oil they found in only one discipline in 2015 is greater than all of the oil they’ve present in Nigeria because the Nineteen Sixties. Shell made a lot extra in 2023, it gifted $23 billion of the income to shareholders as dividends and these had been income largely made outdoors Nigeria.
