Thursday, 28th September 2023

FG mulls merger of oil companies as more IOCs divest

By Kingsley Jeremiah, Abuja
10 July 2022   |   4:04 am
With the growing rate of divestment by International Oil Companies (IOCs) from Nigeria, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said collaboration, strategic alliances, mergers and acquisition...

An oil rig in Bonny Island, Nigeria. Source:

With the growing rate of divestment by International Oil Companies (IOCs) from Nigeria, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) has said collaboration, strategic alliances, mergers and acquisitions may provide leeway for Independent Petroleum Producers Group (IPPG) to enable them compete with multinationals.

The IPPG, an umbrella body for indigenous Petroleum Exploration and Production (E&P) companies in Nigeria, comprising of about 25 members usually engages government and other industry stakeholders to ensure sustainable industry aspirations and contribution to the socio-economic development of Nigeria.

The IPPG and the NUPRC said operation of the nation’s oil and gas sector will progress sustainably with indigenous players, insisting that current situation is more of opportunities.
While over 23 assets were divested by the IOCs between 2009 to date with others already in the pipeline, Chief Executive of NUPRC, Gbenga Komolafe said the development is more of an opportunity for indigenous companies.

Speaking at an event organised by the IPPG on the eve of the Nigeria Oil and Gas (NOG) Conference and Exhibition in Abuja, Komolafe said indigenous companies contributed about 30 per cent of crude oil and 20 per cent of the country’s gas production, as well as 40 per cent and 32 per cent of oil and gas reserves, respectively.

According to him, seven indigenous companies are among the top 20 companies with the highest oil reserves in Nigeria.

“Incidentally, the IPPG by their operational roles and business activities in the Upstream from the point of view of the Commission as the Upstream petroleum regulatory body, has become a major force in the exploration and exploitation of the Nation’s hydrocarbon resources for optimum value addition to the Nigerian economy.

“Nigeria, has the largest participation of local independents in the domestic oil and gas industry activities of all petroleum producing countries in Africa arising from the robust local content policy,” he said.

Komolafe said there was need for stronger IPPG through collaboration, strategic alliances, mergers and acquisitions targeted at producing synergies and large independents that can compete with multinationals.

Komolafe said although the threat posed to the development of the Nigerian hydrocarbon industry by divestments of the IOCs remained of serious concerns but that the impetus for divestment by the majors should spur IPPG and other prospective indigenous player.

“It is indeed the right time to look inwards in the sector to proof the capability of the local content in value addition and optimizing development of the Nation’s hydrocarbon resources, Therefore, we encourage you as indigenous players across the value chain to deploy your competency and ingenuity in promoting vibrancy and capacity utilization in the industry,” he noted.

According to him, the divestment of the IOC away from the country onshore and shallow water terrains present a massive opportunity for new operators of those assets, in which the IPPG is better positioned to take advantage of in order to meet the increasing energy demand.

He urged the independent producers to adopt an innovative and pragmatic approach towards operational excellence to include decarbonisation and improvement in cost efficiency; creation of enabling environment with host communities and utilization of appropriate skills and capabilities.

Chairman IPPG, Abdulrasaq Isa said the indigenous companies must understand the changing dynamics in the oil and gas industry, especially energy transition and divestment by IOCs to ensure that energy security is guaranteed for the country.

He urged the operators to see the opportunities in the prevailing situation, noting that there was need to guide against the effects that these events pose to the nation’s energy security.
According to him, the group has improved value of hydrocarbon extraction in the country, adding that the body would support the country’s energy security remain one of the lofty goals of the group.

He commended the President, Muhammadu Buhari, for his steps to lift the petroleum industry through the passage of the Petroleum Industry Act (PIA) as well as his support for the group and lauded the transparent conduct of the recent marginal fields bid rounds.

Some of those honoured included the Pioneer Chair of Seplat, Ambrosie Orjiako, Austin Avuru of Platform Petroleum, Abdulrasaq Isa of Waltersmith, Dr. Tunde Afolabi of Amni International and Layi Fatona, Pioneer Managing Director of Niger Delta E&P.

Others were Danjuma Saleh of Waltersmith, Charles Odita, formerly of Shell and Midwestern Oil,Oluseye Fadahunsi , Adebayo Ayorinde, Osariemen Owieadolor, Ignatius Ifelayo, Ebiaho Emafo, Pade Durotoye and Dr Ladi Bada.