The Nigeria Extractive Industries Transparency Initiative (NEITI) has announced a review of divestments involving 26 oil blocks worth $6.03 billion by five International Oil Companies (IOCs), citing the need for transparency and due process in these transactions.
The transactions include significant deals such as Shell’s $2.4 billion sale to Renaissance, ExxonMobil’s $1.28 billion transfer to Seplat, and TotalEnergies’ $860 million sale to Chappal.
This was disclosed by the Executive Secretary of NEITI, Dr. Orji Ogbonnaya Orji, during the agency’s first-quarter media briefing in Abuja.
Orji explained that these divestments were reshaping Nigeria’s oil and gas industry, making it crucial to ensure they are conducted transparently and in line with regulatory standards.
He stated that NEITI would strengthen its collaboration with the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) and the Nigerian National Petroleum Company Limited (NNPC Ltd.) to ensure full disclosure of financial, social, and environmental aspects of the transactions.
“NEITI recognises the urgent need for transparency in these transactions to protect national interests, host communities, and revenue flows. To achieve this, NEITI will expand industry reports to include dedicated sections on divestments and intensify collaboration with NNPC Ltd. and other government agencies to disclose forward sales data,” Orji said.
He further stressed the need for proper environmental remediation in oil-producing communities, expressing concerns that some of the divestments may not have adequately addressed environmental damage caused by previous operations.
NEITI, he said, would work with regulatory agencies, including the Ministry of Environment, to ensure oil firms are held accountable for clean-up costs and remediation efforts.
NEITI to review forward sales of crude oil
Beyond divestments, NEITI also plans to review Nigeria’s forward sales of crude oil, particularly in transactions where oil is exchanged for loans. This comes amid complaints from local refineries about inadequate crude oil supply.
Providing a broader industry overview, Orji revealed that Nigeria had earned $831 billion from oil and gas revenues since NEITI began sector audits 23 years ago. He also disclosed that over $4.85 billion had been recovered from the disclosures of $8.26 billion made in NEITI’s 2021 oil and gas report.
“As we commence the 2024 Oil, Gas, and Solid Minerals Reports, we will expand our reporting framework to address forward sales and pre-export financing transactions,” he stated.
While acknowledging Nigeria’s progress in promoting transparency within the extractive sector, Orji noted that institutional constraints and funding limitations continue to pose challenges to achieving full accountability.
What you should know
- Nairametrics reported that earlier this year, Shell completed the sale of its Nigerian onshore and shallow-water assets, SPDC, to Renaissance, a consortium of mostly local companies, as part of a broader strategy to focus on deepwater and integrated gas positions.
- We also reported that TotalEnergies sold its 10% stake in 15 oil mining leases and the Forcados and Bonny export terminals managed by SPDC for $860 million to Mauritius-based Chappal Energies.
- These divestments marked the exit of major IOCs from Nigeria’s onshore operations. Experts say the IOCs can no longer cope with issues of insecurity and vandalism of oil installations in the Niger Delta region.
