For years, international oil companies (IOCs) have been divesting from onshore and shallow water assets in the Niger Delta. The pace of sales is accelerating. On May 3, 2024, the country’s upstream oil sector regulator announced that a total of international oil companies such as Shell Petroleum Development Company, Nigeria Agip Oil Company, Mobil Producing Nigeria Unlimited and Equinor The company announced that it plans to sell its investments in 26 companies. Nigeria’s oil blocks, and in virtually all cases blocked by indigenous oil companies.
According to the regulator, “A total of 26 blocks are proposed for sale. The estimated total reserves of these blocks are 8.211 million barrels of oil, 2.699 billion barrels of condensate, 44.11 trillion cubic feet of associated gas, 46.604 trillion cubic feet of non-associated gas, which will contribute significantly to the country’s hydrocarbon resources.
“While some see this sale as the beginning of the end of the IOC’s involvement in fossil fuel activities, others take a more realistic view of the transition we are seeing.”
According to a Wood Mackenzie report, sales in Nigeria since 2010 have totaled $21 billion, with ExxonMobil’s sales totaling $1.2 billion. Some notable divestments in Nigeria in recent years include:
Shell has transferred a joint venture (JV) license held by its onshore Nigerian subsidiary Shell Petroleum Development Company (SPDC) to Renaissance, a five-company consortium of four Nigeria-based exploration and production (E&P) companies. Sold. An international energy group. This includes a 30% interest in 19 oil mining leases (OMLs). Completion of the transaction is subject to approval from the Federal Government of Nigeria (FGN).
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Mobil Producing Nigeria Limited (MPNU) sold its entire share capital from Exxon Mobil Corporation to Seplat Energy.
Most recently, Total Energies expressed interest in selling a 10% stake in its onshore operations with SPDC to an Indigenous buyer, following the sale of SPDC in January.
Subject to regulatory and contractual approvals, Equinor Nigeria Energy Companies (ENEC) will acquire a 53.85 per cent interest in OML 128 and a 20.1 per cent interest in the Chevron-operated Agbami field to an indigenous company, Chapel Sold to Energies.
While some see this sale as the beginning of the end of the IOC’s involvement in fossil fuel activities, others take a more realistic view of the transition we are seeing. They believe oil companies are running away from the age-old problems of operating in increasingly radicalized communities in the Niger Delta region. There, their assets are equally exposed to constant attacks from young men and oil thieves.
Today, Nigerians are asking a pertinent question: Should these oil and gas sales that we are witnessing be so protracted and difficult? The answer should be no, but everything is complicated in Nigeria to maintain a culture of rent arrears that is plaguing the Nigerian economy.
At a recent industry dialogue on IOC divestments in Abuja, Nigeria Upstream Petroleum Regulatory Commission chief executive Gbenga Komolafe said: They seemed more concerned about the need to consider the issue. The laws and processes governing the proposed sale of oil and gas assets by international oil companies to indigenous companies. ”
While not abandoning this goal, regulators should instead be more concerned about the requirement for a quick completion of the transaction, given the huge potential this presents for increasing Nigeria’s oil production.
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It is unacceptable that one aspect of President Bola Tinubu’s Independence Day speech that attracted attention was the mention of the NUPRC’s impending approval of the sale of ExxonMobil. It’s surprising that a private company deal becomes a matter of national importance on a presidential broadcast because it shows a failure in our process. The ExxonMobil sale and delays in approving a similar move by Shell highlight broader issues. The approval process for the sale of Nigeria’s gas and oil assets is often too slow and unnecessarily complex.
Basically, this is a private sale. Routine benefit transfers that don’t need to be celebrated in a national address. But delays made it a milestone. Regulators need to make sure the buyer is qualified and competent, but it’s equally important that the process doesn’t drag on to the point where it becomes a national story. Delays in approval reduce signal efficiency. They undermine investor confidence and discourage potential investment by countries desperate for inward flows. These delays hinder much-needed capital injections, impede production growth and ultimately impact Nigeria’s revenue. The longer the process goes on, the worse Nigeria will be as a business-friendly environment. Investors prefer clear and predictable processes rather than ones fraught with bureaucratic delays and corruption risks. While the current government’s efforts to speed up some transactions are commendable, there is still room for improvement, especially with an expected increase in M&A activity in the oil and gas sector.
This dynamism can be positive, but only if you streamline the process. To improve, you must first leverage technology to break through bureaucracy and create a roadmap to simplify and standardize approvals. Second, we need to increase transparency with simple and accountable mechanisms that reduce the risk of corruption. Additionally, Nigeria needs to strengthen stakeholder engagement and align interests by fostering dialogue between government, industry and communities long before the IOC ultimately abandons its assets. Finally, Nigeria maintains political neutrality and maintains process consistency, technicality and predictability, as well as significant investment in improving regulatory capacity and ensuring faster and more effective approvals. should be done. Nigeria has an obligation to continue to make the divestment process more efficient.
Given the concerns of many people, international researcher Professor Rick Steiner from Alaska (USA) conducted a study on divestment and decommissioning in the Niger Delta with support from the Center for the Study of Multinational Enterprises (SOMO). . His research findings are published in the research paper “A Just Transition: Reforming the Divestment, Decommissioning and Abandonment of the Petroleum Industry in Nigeria’s Niger Delta.” Based on the report’s recommendations and drawing on past research, civil society organizations in the Niger Delta today launched National Principles for Responsible Petroleum Industry Divestitures to ensure divestment processes are inclusive, transparent and inclusive. We are advocating for change to become more sustainable and sustainable. The principles include: All oil industry divestment applications must be publicly notified at least 90 days prior to submission to the Federal Government of Nigeria. It is essential to recognize that there is an urgent need to develop strategies to responsibly address industry decline.
