ExxonMobil is downsizing its operations in Africa’s largest oil-producing nation as it moves to reduce its office space in Lagos while curtailing activities in Nigeria.
According to a report by Reuters, Exxon has reportedly left its expansive office in Lagos, choosing a smaller, more centralized space instead. Similar reductions are anticipated in other Nigerian cities where the company operates.
Reuters reports that Exxon is transferring employees from the 12-floor Mobil House, which is leased for $10 million a year, to a six-floor office building located 22 kilometres away in the affluent Ikoyi district— designed to house only half of the staff from the previous location.
“The new office leaves no one in doubt about its future plans for Nigeria,” a staff member of the company told Reuters.
The precise number of employees impacted by the office shutdowns remains uncertain, yet the action is expected to lead to job cuts and a reduced presence for Exxon in the nation.
Other IOC trends in Nigeria
- Industry experts believe that Exxon’s move is reflective of a broader pattern among international oil companies (IOCs) in Nigeria.
- Many IOCs are under pressure to cut expenses and optimize operations, resulting in a trend towards leaner, more effective teams.
- In January, oil major, Shell Plc, reached an agreement to sell its Nigerian onshore oil assets to a local consortium for over $1.3 billion, pending government approval.
- In addition to the initial sum, Shell anticipates receiving extra payments of up to $1.1 billion. The purchasing consortium, named Renaissance, comprises ND Western, Aradel Energy, First E&P, Waltersmith, and Petrolin.
- Similarly, TotalEnergies stated plans to offload its minority stake in a significant Nigerian onshore oil joint venture following Shell’s divestment announcement.
What you should know
Oil companies are scaling back operations in Nigeria due to a combination of factors that have undermined the profitability and sustainability of their ventures, with oil thefts in the Niger Delta being a primary concern.
This region, rich in oil reserves, has been plagued by systemic theft and sabotage of pipelines, leading to significant revenue losses and environmental damage.
The CEO of TotalEnergies Patrick Pouyanne, for instance, mentioned that the firm has not conducted any oil exploration in the region for 12 years due to insecurity.
Meanwhile, companies like Shell Plc and ExxonMobil have opted for divestment strategies to cut costs and reallocate investment in deep water operations where there are fewer risks and threats of hostile business environments.
