IOCs and Divestment of Nigerian oil assets Reports of Chevron’s plan to sell off interest in two Nigerian assets recently flooded the media space. It is the latest of the divestment of assets by international oil companies (IOCs), operating in the nation’s oil and gas industry. Chevron has said the planned sale of its 40-percent interest in oil mining leases (OMLs) 83 and 85 located in the country’s shallow waters off the coast of Bayelsa State, was part of its portfolio evaluation. In recent times, Nigeria’s oil and gas industry with an estimated value in excess of $340 billion which contributes 70 percent of GDP, 90 percent of foreign exchange and 80 percent of budgetary revenue, has seen divestment of assets by some major oil companies amid allegations of uncertainty in the country’s oil and gas industry, in the face of the long delay in the passage of the vital Petroleum Industry Bill (PIB). In 2012, Shell, Total, ConocoPhillips and Agip divested part of their stakes in the oil and gas industry. The delay in the passage of the PIB is believed in many quarters to have made the industry less attractive to the oil majors; hence their decision to reduce their footprints on the nation’s oil industry by selling part of their assets, while some have suspended new investments, especially in deep offshore areas where they complained that the PIB imposes stiffer conditions on the operations. Last year, Shell, Chevron, ExxonMobil, Total SA and Eni, who pump about 90 percent of Nigeria’s oil through ventures with the Nigeria National Petroleum Corporation (NNPC), had said in a joint presentation to the legislature that the proposed higher taxes in the PIB would make exploration of oil and gas uneconomical. Peter Voser, the chief executive officer, Royal Dutch Shell plc, had said in an interview that the current draft of the PIB, which is still the subject of discussions and consultations would make it highly unlikely that Shell – and the whole industry–could invest in offshore and domestic gas projects. He stated that the uncertainties surrounding the new PIB might change the company’s views on investing in Nigeria, depending on how the PIB is implemented. Before the announcement by Chevron that it would sell its interest in the oil blocks, Brazilian oil major, Petrobras, has reportedly commenced moves to sell off its stake in some Nigerian oil blocks, offshore. Agbami blocks, which are operated by United States energy major Chevron and a 20 percent share of the offshore Akpo project, operated by French oil firm Total. Late last year, Total sold its 20 percent stake and operating mandate of its Nigerian offshore project to a local unit of China’s Sinopec for $2.5 billion. ConocoPhillips, US-based oil group, sold its onshore assets after 46 years of operation in Nigeria to Oando plc. In 2010, British Gas (BG) Exploration and Production, pulled out of Nigeria in May 2010, despite investing over $500 million in its exploration activities on the offshore blocks Oil Prospecting Licences (OPLs) 332, 286, 284 and Olokola Liquefied Natural Gas. BG Nigeria, which is 100 percent owned by BG UK plc, was reported to have described Nigeria’s oil and gas sector as turbulent. President Goodluck Jonathan was recently reported to have said that investment in the country’s oil industry was falling because of delays in passing the PIB, adding that the conclusion of the bill was critical. The PIB, which is expected to overhaul the industry, is currently before the National Assembly. Analysts have stressed the need for the country, not just to pass the PIB, but to ensure that the right bill that will revive the industry is passed.
Posted on: Wed, 02 Oct 2013 08:28:47 +0000
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