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Divestments by IOCs won’t lead to crisis – Government

By on May 15, 2014

The recent spate of asset divestments by international oil companies operating in the country will not lead to crisis in the oil and gas sector, the Federal Government has said.

Some industry observers and analysts have expressed apprehension that the massive divestment by the IOCs might trigger a crisis in the sector.

But the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, in a statement made available on Tuesday by the Nigerian National Petroleum Corporation, said the trend provided opportunities for indigenous oil and gas companies to become active players in the upstream sub-sector of the industry.

She explained that with the divestments, indigenous oil and gas companies now had the opportunity to acquire the assets being divested by the IOCs as springboard for the development of local capacity.

Alison-Madueke stated that the divestments by the IOCs were creating opportunities for indigenous operators to partake in the upstream sector of the industry and grow capacity.

“Let me allay fears that the spate of divestments would not lead to crisis in the nation’s oil and gas industry; rather, the divestments by the majors are changing the onshore corporate landscape and creating material brown field opportunities for upstream players looking to enter the Nigerian upstream space,” she was quoted as saying.

The minister 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 per cent 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,” Alison-Madueke added.

Highlighting the opportunities inherent in the divestment, the minister said, “The indigenous Nigerian companies have been presented with the opportunity to develop local operating capacity as well as boost local production, and consequently grow into major upstream players.”

She cited the Nigerian Petroleum Development Company, the upstream subsidiary of the NNPC, as an example of an indigenous company that had tapped into the opportunity provided by the divestment.

 

 

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