Nigeria is missing in the published 2024 spending plans of American oil giants Chevron and ExxonMobil with several major projects in the country left in limbo.
The two oil multinationals have recovered from the 2020 crisis with bumper cash flows in 2021 and are making plans to boost their capital spending next year. Capital discipline and higher returns to shareholders are expected to remain top priorities.
In their capital expenditure outlook for 2024, the companies made no mention of Nigeria while Libya, Ivory Coast, Kazakhstan, Guyana, Brazil and Singapore, among others feature prominently in it.
For instance, Chevron ignored Nigeria’s 100,000-barrels-per-day (bpd) Nsiko offshore deepwater project despite plans to spend between $18.5 billion and $19.5 billion next year on new oil and gas projects, an 11 percent increase on this year.
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ExxonMobil was silent about Nigeria’s 80,000bpd Bosi oil field it discovered in 2006, and the 110,000bpd Uge deepwater project.
ExxonMobil’s 2023 funding plan also excluded Nigeria’s Owowo oil reserve field it discovered in October 2012.
Chevron’s 2024 budget and that of rival ExxonMobil reflect the industry’s continuing rebound after pandemic-influenced pullbacks, recent acquisitions and carbon reduction initiatives. Exxon plans to spend between $22 billion and $27 billion annually through 2027.
While both are spending more, the combined sums are about half the combined $84 billion Exxon and Chevron spent in 2013, when oil prices often traded above $100 per barrel. The two are benefitting from higher energy prices and pandemic cost-cuts.
Chevron’s planned spending includes between $15.5 billion to $16.5 billion in organic capital expenditure for consolidated subsidiaries, and another $3 billion for affiliates.
About half of the affiliate spending is for Tengizchevroil’s project in Kazakhstan, the company said.
Chevron’s figure excludes any impact from its proposed acquisition of rival Hess Corp. That deal, which is expected to close next year, will push capital spending to between $19 billion and $22 billion, it said.
The oil producer in October agreed to buy Hess for $53 billion in stock to gain a bigger US oil footprint and a stake in ExxonMobil’s massive Guyana offshore oil discoveries.
The 2024 outlook did not include a new forecast for oil production next year. Chevron previously said the two deals would bring total oil and gas output to about 3.7 million bpd.
Chevron plans to spend about $9 billion of its current budget in the US as oil companies move investments to the Americas to reduce costs and pare geopolitical risks.
About $5 billion will go to its fast-growing Permian shale production operation.
Read also: Chevron says no plans to exit Nigeria
Chevron said the shale and tight oil spending increases reflect its acquisition of PDC Energy, an independent exploration and production company, earlier this year.
Projects in the Gulf of Mexico will take up more than $2 billion, with production from a new oil platform, Anchor, expected to start next year. And roughly 80 percent of the $1.5 billion for refining and chemicals will also be allocated in the US, it said.
The company intends to increase share repurchases by $2.5 billion to the top end of its guidance range of $20 billion per year once the Hess deal closes.
The decision by the two companies comes as Nigeria grapples with a number of challenges, including insecurity, oil theft, and a lack of infrastructure. These challenges have made it difficult for the country to attract the investment needed to develop its oil and gas resources.
Several international oil companies have sold their assets in Nigeria in the past year.
The Norwegian oil corporation Equinor announced last month that it had sold its Nigerian subsidiary to a little-known Nigerian company Chappal Energy.
Italy’s Eni announced in September that it would sell its onshore subsidiary to Oando Plc. Addax Petroleum Development Plc exited from its four major mining oil blocs last year.
ExxonMobil announced in February last year that it had agreed to sell its equity interest in Mobil Producing Nigeria Unlimited, which holds a 40 percent stake in four oil mining licences, including more than 90 shallow-water and onshore platforms and 300 producing wells, to Seplat Energy Plc. But the transaction has been blocked by the regulator and the Nigerian National Petroleum Company.
Shell had announced in 2021 its intention to reduce its involvement in onshore oil production in Nigeria. It suspended plans to sell its assets last year, in compliance with a Supreme Court ruling that said it had to wait for the outcome of an appeal over a 2019 oil spill.
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“The global oil majors are essentially pulling out of their investments in onshore and shallow water assets, which have been plagued by widespread theft and vandalism for the most of the previous five years in the Nigerian business,” Charles Akinbobola, an energy analyst at Sofidam Capital, said.
Analysts believe that indigenous Nigerian companies have a chance to gain market share by purchasing these divested assets.
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