IOC Assets Divestment Good for Local Players – Alison-Madueke
Contrary to the apprehension in some quarters that the recent spate of assets divestments by international oil companies (IOCs) operating in Nigeria could create crisis in the oil and gas industry, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, noted that the trend actually provides opportunity for indigenous oil and gas companies to become active players in the upstream sub-sector of the industry.
At an investment luncheon organized by the Petroleum Technology Association of Nigeria (PETAN) during the recent Offshore Technology Conference in Houston, Texas, The Minister explained that with the divestments indigenous oil and gas companies now have opportunity to acquire the assets being divested as springboard for the development of local capacity.
Speaking on “Assets Divestments in the Nigerian Oil and Gas Industry: Opportunities and Challenges”, the Minister who was represented by the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engr. Andrew Yakubu, stated that the divestments by the IOCs were creating opportunities for indigenous oil and gas companies to partake of the upstream sector of the industry and grow capacity.
“Let me allay your fears that the spate of divestments would not lead to crisis in the nation’s oil and gas industry, rather the divestment by the majors is changing the onshore corporate landscape and creating material brownfield opportunities for upstream players looking to enter the Nigerian upstream space,”Alison-Madueke noted.
She observed that the divesting IOCs were not leaving the country but only shifting their focus from onshore to the more challenging frontiers of deep offshore which currently accounts for 60% of Nigeria’s production.
“The IOCs remain very much present in Nigeria. Shell still retains ownership of 34 onshore blocks while Total, ExxonMobil, and Chevron are still committing large amounts of capital to assets offshore Nigeria,” she explained.
Highlighting the opportunities inherent in the divestment, Alison-Madueke stated: “The indigenous Nigerian companies have been presented with the opportunity to develop local operatorship capacity as well as boost local production and consequently grow into major upstream players”.
She cited the Nigerian Petroleum Development Company (NPDC), the upstream subsidiary of the Nigerian National Petroleum Corporation (NNPC), as an example of indigenous Nigerian company that has tapped into the opportunity provided by the divestment to transform from a small time player with a production of 60,000 barrels per day (bpd) in 2007 to a mid-size player with a current production of over 140,000 bpd through the assignment of 55% equity in 8 divested blocks.
She disclosed that NPDC has grown to become the biggest producer and supplier of gas to the domestic market through its aggressive development of the assets assigned to it from the divestment process, adding that the Federal Government was ready to strengthen and support the company toachieve its medium term objective of growing production to 250,000 bpd.