Oil majors to stay onshore Nigeria despite rumours of an exodus

A wave of planned sales of onshore Nigerian assets by oil majors has prompted speculation that they are finally leaving the Niger Delta because of oil theft, gangsterism and political uncertainty, Reuters reports. However, according to industry source, foreign firms such as Royal Dutch Shell, Eni and Total have no intention of leaving just yet.

There is little doubt that the majors will sell off some small blocks that are realistically not worth their while – think those assets worst affected by theft and sabotage, or field that risk expropriation in a government push to promote local ownership.

However, the larger oil producing blocks, huge gas deposits, key pipelines and the export terminals that control the passage of onshore oil to international markets will most likely stay in their hands, which will enable them to retain infrastructure for which they can charge rent to other users.

Complaints by oil majors that Nigeria has done little to combat oil theft or end uncertainty over changes to the fiscal regime by passing the Petroleum Industry Bill (PIB) are genuine, but they won’t drive the firms away from the country.

“Nigeria’s ‘difficult’ operating environment, security concerns and the non-passage of the PIB all provide useful cover for what may essentially be a portfolio optimisation process,” said Razia Khan, Head of Africa Research at Standard Chartered.

What they say…

  • Shell CEO Peter Voser told Reuters this month the company was not seeking to leave Nigeria. Shell recently announced it would spend $3.9 billion on a gas project and a reconstruction of a better protected Trans Niger pipeline, one of the country’s most important crude oil routes and often hit by outages caused by theft or sabotage. That suggests it still sees value working onshore in Nigeria.
  • Eni said it had lost 30,000 bpd of output in the first half of the year due to theft and CEO Paolo Scaroni said the company was “reviewing its position” in Nigeria.
  • Total declined to comment on its plans
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