Despite landmark opportunities created from divestment of onshore assets by International Oil Companies (IOCs), oil and gas experts, yesterday, raised concerns about indigenous firms’ preparedness to take over these assets amid lingering challenges.
Legal battles, decommissioning worth billions of dollars, weak infrastructure, existing battles on general clean-up and compensation for oil and gas producing communities top challenges that may make or mar most indigenous companies apart from existing issues of vandalism and theft.
Already, many of the IOCs have restated their interest in consolidating their offshore capacity, relinquishing the onshore assets to indigenous players.
Speaking at the opening of the Nigerian International Energy Summit (NIES) yesterday in Abuja, where President Muhammadu Buhari insisted that with the Petroleum Industry Act (PIA) in place, there should be no excuses for the nation's oil sector not to accelerate investment, most stakeholders expressed concern about energy transition and divestment from the sector.
According to Buhari, who was represented by Minister of State for Petroleum Resources, Timipre Sylva there is now a level of certainty for the regulatory, administrative and fiscal framework and the legitimate grievances of host communities most impacted by activities of the industry has been addressed by the Act.
On divestment, recall that, Shell is expected to divest about $2.3 billion, ExxonMobil is expected to divest as much as $15 billion worth of assets. Eni’s figure was put at about $5 billion.
An international research body, Rystad Energy estimated other assets including that of Total and ConocoPhillips to be at about $27.5 billion.
At the same time, Nigeria and other oil producing countries across the world are expected to expend about $105 billion on decommissioning in the next 10 years.
According to Wood Mackenzie, otherwise called WoodMac, between 2018 and 2022, no less than $32 billion is going to be spent on decommissioning around the world.
While the UK, the US and Norway, were ranked the top three decommissioning destinations in the next 10 years, Nigeria followed Angola as the seventh country that would be spending heavily on decommissioning in the next decade.
Decommissioning, a process of safe plugging of the hole in the earth’s surface and disposal of the equipment used in offshore oil production, is reportedly becoming a rapidly developing market sector in the petroleum business, with major potential and risks.
Coming at a time when Seplat is already concluding transaction to take over a subsidiary of ExxonMobil for about $1.3 billion, the prevailing situation is raising doubts as AITEO is currently engaged in a legal tussle with Shell, seeking over $2.5 billion compensation over the sale of Oil Mining Licence 29.
In January 2021, Eni and the partners divested the onshore production and development block OML 17 (Eni’s interest was five per cent). Depending on what Eni decides to sell, the transaction may rise from $2 billion to $5 billion, industry sources note.
