FOR THE RECORD: IOCs’ ₦4.3 Trillion Oil Assets Up For Grabs In Two Years

Oil rig

• Indigenous firms pay ₦1.3 trillion for asset acquisition in 7years
International Oil Companies (IOCs) are expected to relinquish interest in over US$12 billion (₦4.3 trillion) oil blocks, which are expected to expire between 2017 and 2019.

The Guardian Nigeria report continues:

Already, about 17 Niger Delta onshore Oil Mining Leases (OMLs) belonging to the Shell Petroleum Development Company of Nigeria Limited (SPDC) will expire in the next two years.

If the IOCs do not renew the licences, it opens up more opportunities for indigenous investors to buy over these assets and boost the participation of Nigerians in the nation’s petroleum industry.

Already, three of the IOCs have divested from 24 OMLs in the last three years, through which indigenous oil firms have invested about US$10 billion to acquire the assets.

Sector operators believe that the decision by the IOCs such as Shell, Chevron, Agip and others to divest their shares in the industry, especially the onshore Niger Delta operations, has boosted the operation of indigenous oil firms. The idea enabled local players to participate actively in oil exploration and production (E&P) activities, an area hitherto, regarded as an exclusive preserve of the multinational oil firms.

Speaking Tuesday during the Aspen Energy Roundtable in Lagos, on “Growing Nigerian Independents to World Class Exploration and Production Companies,” Seplat’s Chief Executive Officer, Austin Avuru, said the bulk of the fund for the asset acquisition came from Nigerian banks.

He noted said large volume of reserves would soon be available for grabs as many OMLs expire in the near term, particularly the Shell Joint Venture licences in 2019.

Avuru emphasized the need to encourage more local content implementation in Nigeria’s oil sector, saying: “Local content without capacity development is meaningless.”

Dwelling on how to survive in the current challenging oil and gas environment, he said: “There should be multiple sources of income with varying risk profile for oil and gas operators. Sustainably growing the oil and gas production and reserves using the best technology is very import. Competent workforce is very necessary for growth. Health, Safety and Environment must be a matter of business priority.

He also stressed the need to employ the best personnel for the job irrespective of relationship with the candidate. “Strategically recruit the best personnel to ensure corporate survival and business continuity. Host community must be treated as stakeholders to avoid disruption of operations.”

Also speaking, the Managing Director, Niger Delta Exploration & Production Plc. Dr. Layi Fatona, said the IOCs assets acquired by the indigenous operators have grown into portfolios of new entities.

According to him, some lesson from the previous acquisition showed that some assets were over-priced. “There was also politicization of the bid process, citing the assumption of operatorship by Nigerian Petroleum Development Company (NPDC) of certain assets whiles others were left to buyers.

He added that acquisition of assets belonging to the IOCs have also become a catalyst for industry capacity building.

A former Director, the Department of Petroleum Resources (DPR), Osten Olorunsola, stressed the need for operators in Nigeria’s petroleum industry to always consider trends and events in the global energy demand in their business decisions.

He argued that enabling policies and frameworks are fundamental for efficient management of Nigeria’s hydrocarbon resources.

He said: “Apart from rising demands and supply deficits, the sub-Sahara Africa energy sector is huge and will continue to widen growth opportunity for Nigeria. Nigeria should begin to move away from exporting crude oil.

“It is very necessary that we consider the growing impact of shale oil, technology advancement and the ongoing penetration of electric cars and the broader mobility revelation.”

Speaking on the reasons for the roundtable meeting, Chairman of Aspen Energy, Bayo Opadere, said the inherent potential in Nigeria’s oil and gas sector will not be realized without stakeholders’ efforts.