• Saturday, June 15, 2024
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Oil majors’ asset sales bad for Nigeria – Kachikwu

PIA fails to halt oil majors’ divestments

Ibe Kachikwu, a former minister of state for petroleum resources, has said the flurry of divestments by International Oil Companies from onshore and shallow waters does not bode well for Nigeria and the government needs to have an honest conversation on how to deal with the issues.

In remarks at the fifth edition of the Nigerian International Energy Summit in Abuja on Tuesday, Kachikwu said the divestments happening at the same time “means something is wrong,” adding that the country needed IOCs’ funding capacity to develop the assets.

“We need to have a relationship discussion with the IOCs; if they are not doing crude, they can do gas,” he said.

Last week, ExxonMobil announced that it had reached an agreement to sell its equity interest in Mobil Producing Nigeria Unlimited to Seplat Energy, a Nigerian independent oil and gas company, through its wholly-owned subsidiary Seplat Energy Offshore Limited.

When finalised, the sale will include the Mobil Development Nigeria and Mobil Exploration Nigeria equity ownership of Mobil Producing Nigeria Unlimited, which holds a 40 per cent stake in four oil mining licenses, including more than 90 shallow-water and onshore platforms and 300 producing wells.

“This sale will allow us to prioritise competitively advantaged investments in our strategic assets, and it supports the Nigerian government’s efforts to grow its oil and gas operations,” said Liam Mallon, president of ExxonMobil Upstream Oil, and Gas.

The transaction, valued at over $1.2 billion, is just one of the divestments planned by oil majors operating in the country. Shell and Chevron have their divestment programme in the works.

Shell has progressed discussion with local companies bidding for its assets.

The IOCs are looking to increase their footprint in the deep offshore space, which is less prone to the communal issues and sabotage commonly experienced with onshore and shallow-water assets.

Read also: Oil theft, pipeline vandalism fuelling IOCs divestment in Nigeria downstream sector — NEITI

Kachikwu argued that since Nigeria had declared its ‘Decade of Gas’, it could make a case for the oil majors to use their financial clout to develop gas, which is seen as a transition fuel.

The former minister urged the Nigerian government to speed up oil production to harness value from rising prices, seek new financing models, and leverage energy sources such as wind and sun available in the country in response to the energy transition.

“We have tended to export crude oil in perpetuity; we should now be adding value,” said Kachikwu, praising the Dangote Refinery billed to come on stream at the third quarter of the year and modular refineries.

He urged the government to reallocate unused oil blocks rather than having fields lying fallow.

“We have to distribute acreages and resource allocation to ensure equitable distribution, otherwise, the same problems we have seen with oil, you will get with gas,” he said.