The Minister of Petroleum Resources (Oil), Heineken Lokpobiri, has addressed concerns about the potential exit of international oil companies (IOCs) such as Shell, ExxonMobil, and Eni, following ongoing divestment deals.
Speaking on the sidelines of the African Energy Week in Cape Town, South Africa, Lokpobiri clarified that divestment does not equate to an exit but rather reflects a strategic shift by IOCs to focus on offshore operations.
The Minister noted that he has engaged with various stakeholders, including independent operators and marketers, and none of these companies have indicated any intention to leave Nigeria.
Lokpobiri explained that offshore operations appear more appealing to IOCs due to their distance from the challenges posed by local communities, offering a more secure and stable working environment.
“Let me say this. I interact with all the companies. IOCs, service providers, independent operators, marketers none of them are leaving Nigeria. I want to use this opportunity to assure the world that no company is leaving Nigeria.
“All those divesting are going into deep offshore because they don’t want to contend with the local issues that they have been contending for the past 70 years.
“The onshore and shallow water assets that they have been operating all these years, they want to leave them to the indigenous operators and go deep offshores. No company is leaving Nigeria because some people have the impression that companies are leaving. They are going to deep offshore beyond the capacity of the local players,” Lokpobiri said.
Indigenous Oil Companies Capacity
- Lokpobiri further stated that indigenous energy companies acquiring the onshore assets of IOCs are fully capable of managing these operations effectively.
- He highlighted that local players like Seplat and Oando Plc have been cooperating in these fields alongside IOCs for years, demonstrating their expertise and capacity.
- The Minister also assured that Nigeria will not lose out on royalties, taxes, or capital inflows as a result of these divestments, emphasizing the continued economic benefits to the country.
“Let me start with the merger and acquisitions going on. I will use this opportunity to assure the rest of the world that Nigeria is just like any other country in the world. Some will bring their capital to invest and there will be some divesting. We are not against divestment. I always contend have enormous capacity in our indigenous company.
“Seplat is an indigenous company that bought ExxonMobil. Similarly, Oando is a very serious company that NAOC. These companies have grown with enormous capacity.
“Even before the divestment, most of these companies have Nigerians as their field operators. The expatriates are only just in the office to oversee what’s going on. So, Nigeria will have nothing to lose in terms of royalties, taxes, and the way these things are professionally run. They have nothing absolutely to lose. It creates another opportunity for Nigerians to actually show themselves,” Lokpobiri said.
What you should know
The Nigerian onshore oil industry has witnessed significant changes in recent years as major international oil companies (IOCs) have divested their stakes, creating opportunities for local players to take over these operations.
- This shift reflects a broader trend of IOCs streamlining their portfolios and focusing on offshore or more profitable ventures in other regions.
- In May 2024, Shell finalized an agreement to sell its 30% stake in the Shell Petroleum Development Company of Nigeria (SPDC) to a consortium largely comprised of indigenous companies.
- The transaction, valued at up to $2.4 billion, marked a pivotal moment in the industry, signaling increased participation and capability of local operators in managing key oil assets.
- Similarly, other IOCs such as ExxonMobil, Eni and Norway’s Equinor have also sold off their onshore assets in Nigeria over recent years.
Despite these exits, the Nigerian oil and gas sector remains robust, with local companies stepping in to maintain production and ensure the continuity of operations.
