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Fresh turmoil looms as Nigerian companies eye a $4.5 billion buyout of Shell, ExxonMobil, and Nigerian Agip Oil Company Limited (NAOC) assets amid Shell's planned exit from Nigeria's onshore oil and gas industry.
Renaissance Africa Energy announced a $2.4 billion agreement with Shell to acquire the 100% holding in the Shell Petroleum Development Company of Nigeria Limited (SPDC), while Seplat aims to secure ExxonMobil's onshore assets for $1.3 billion. Oando secured an $800 million loan for NAOC's acquisition of four onshore blocks (OML 60, 61, 62, 63).
The Nigerian Upstream Petroleum Regulatory Commission (NUPRC) deems this a blessing but insists on scrutinizing all companies, citing a lack of convincing details under the new divestment template. Amnesty International urges Nigeria to compel Shell to address years of environmental pollution in the Niger Delta before exiting.
The ongoing divestment by international oil companies reveals challenges within Nigeria's oil sector, including abandonment, decommissioning, oil theft, pipeline vandalism, legal cases, and environmental degradation.
As divestment accelerates, complexities arise, requiring thoughtful solutions. The strategic shift poses challenges and benefits, with concerns about abandonment, decommissioning, environmental issues, legal crises, labour conflicts, vandalism, and challenges for Nigerian companies.
Nigeria faces a crisis in declining oil production due to a lack of sector investment over the last decade. Coupled with climate issues, the country witnessed $21 billion worth of divested assets in recent years, leading to a 74% decline in yearly upstream capital expenditure from $27 billion in 2014 to less than $6 billion in 2022.
NUPRC's Chief Executive, Gbenga Komolafe, emphasizes safeguarding Nigeria's interests, stating that ExxonMobil's divestment approval is pending due to unmet criteria. Komolafe highlights the positive aspect of divestment, allowing domestic and international investors to demonstrate capability, with local investors understanding the environment better.
Energy expert Ademola Adigun urges the Federal Government to expedite the divestment process, avoiding delays that tarnish the country's image.
