The accelerated exit of International Oil Companies (IOCs) from Nigeria’s onshore and shallow water assets, particularly in the Niger Delta, marks a pivotal moment in the country’s economic landscape. Shell, ExxonMobil, TotalEnergies, and others have either divested or are in the process of divesting from long-held stakes in Nigeria’s oil fields, passing control to indigenous firms. However, what should be a relatively straightforward process has become unnecessarily drawn out and complex, reflecting systemic issues in Nigeria’s regulatory and economic framework.
The scale of these divestments is significant. Since 2010, more than $21 billion worth of assets have changed hands, with a pending $1.2 billion deal from ExxonMobil still awaiting approval. While the rationale behind the IOCs’ withdrawal is rooted in global trends—shifting energy priorities and growing pressure to decarbonise—the manner in which Nigeria is handling these transitions raises fundamental concerns. Regulatory delays, bureaucratic hurdles, and a culture of rent-seeking are impeding what could otherwise be a smooth transfer of assets to local companies.
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The recent announcement by President Bola Tinubu that ExxonMobil’s divestment is imminent highlights a troubling dynamic: the transfer of private sector assets has become so fraught with delays that it has now risen to the level of presidential discourse. In most functioning markets, such transactions would be routine, requiring only minimal oversight to ensure compliance. In Nigeria, however, these deals are bogged down by inefficient approval processes, damaging the country’s reputation as a viable destination for foreign investment.
This problem is not new, but it is becoming increasingly urgent. The longer the divestment process takes, the greater the risk to Nigeria’s oil production and revenue generation. In a nation facing severe fiscal challenges—including rising debt and inflation—such delays are deeply counterproductive. The protracted approval process for Shell’s sale of its onshore assets and ExxonMobil’s transaction with Seplat Energy reflects poorly on Nigeria’s regulatory apparatus. While ensuring that indigenous companies are capable stewards of these assets is vital, the current process is cumbersome, unpredictable, and opaque.
“This problem is not new, but it is becoming increasingly urgent. The longer the divestment process takes, the greater the risk to Nigeria’s oil production and revenue generation.”
What is needed is a complete overhaul of the regulatory environment governing oil and gas divestments. First, the approval process must be streamlined. A clear, transparent, and predictable roadmap for asset transfers would go a long way toward restoring investor confidence. Leveraging technology to automate parts of the process could also reduce opportunities for rent seeking and corruption.
Secondly, transparency must be at the heart of any reform. Publicising divestment applications and allowing for a 90-day period of stakeholder engagement would foster accountability and trust in the system. More critically, the government must engage constructively with communities in the Niger Delta, where the socio-political challenges of militancy, environmental degradation, and oil theft persist. Indigenous companies taking over these assets must be equipped not only to manage the operational aspects but also to address these longstanding issues responsibly.
Rick Steiner’s recent report on oil divestment and decommissioning in the Niger Delta underscores the importance of a “just transition.” His recommendations, backed by civil society organisations, call for a divestment process that is inclusive, transparent, and sustainable. Nigeria must take heed. As the world transitions away from fossil fuels, the country cannot afford to mismanage this critical period of transition.
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President Tinubu’s administration should focus on creating an enabling environment for faster, more efficient approvals, particularly in light of the increasing merger and acquisition activity in Nigeria’s oil and gas sector. Simplifying the divestment process while maintaining regulatory rigour is essential to ensuring that the country remains competitive and attractive to investors.
Nigeria’s current approach to oil divestments is reflective of deeper issues within its governance framework—complexity for complexity’s sake. The nation cannot afford to let bureaucratic inertia stand in the way of much-needed capital inflows, production growth, and economic stability. Speeding up the divestment process is not just a matter of improving efficiency; it is a matter of national economic urgency.
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