‘IOC divestments may push indigenous producers to 70% ownership’

The divestment of onshore and shallow water assets by International Oil Companies (IOCs) in Nigeria could enable indigenous oil producers to control up to 70 per cent of the country’s oil production.

Oluseye Ekun, Chairman of the Management Session Committee at the Nigerian Association of Petroleum Explorationists (NAPE), disclosed this, noting that IOCs, including Shell, ExxonMobil, Eni, and Equinor, are shifting their focus to deepwater operations while divesting from assets affected by security concerns, theft, and vandalism.

“These divestments represent a significant opportunity for indigenous oil companies to take a larger role in the sector. If properly managed, the transactions could lead to local operators accounting for approximately 400,000 barrels per day of production, with potential for growth through new investments,” Ekun said.

In Nigeria alone, Shell has reportedly divested $2.4 billion to Renaissance Africa Energy, TotalEnergies has divested over $900 million to Chappal Energies, Eni has divested over $800 million worth of assets to Oando, ExxonMobil’s $1.3 billion sale to Seplat Energy, and Equinor has made a $1.2 billion divestment.

The recoverable oil from these reserves is estimated at 2,325 million barrels, indicating that the near 100-year dominance of IOCs on the continent is nearing its end, with the sector moving towards a $2 trillion value opportunity for national players and investors.

Ekun noted that while these developments position local companies for increased ownership, challenges remain, including access to financing and advanced technology.

He also emphasised the need for strong policies to ensure the sustainability of these investments.

“The Federal Government has issued executive orders aimed at improving competitiveness in the sector, but more needs to be done to attract investments and secure the future of the industry,” he added.

Ekun stressed that, with effective management and strategic investments, indigenous operators could drive growth in the sector and solidify their role as key players in Nigeria’s energy landscape.

He highlighted that Nigeria’s energy market faces significant challenges due to its overreliance on imported fuel, which compromises energy security.

“Achieving energy independence remains crucial for the country’s economic and social growth,” he stated.

“To address this, Nigeria must optimise its oil and gas resources, harnessing the benefits to meet the energy demands of its population and drive sustainable development.”

Ekun noted that the ongoing mini-bid round for deepwater exploration, accompanied by supportive regulatory actions, is poised to attract significant investment to Nigeria’s oil and gas sector, fostering a favourable business environment.

He outlined several measures to boost indigenous participation and attract investment in the oil and gas sector, including improving entry costs and terms for new exploration blocks/leases by adopting market-reflective signatory bonuses.

Ekun also called for strategic alliances to access expired but unexplored deepwater blocks, urging the government/NNPCL to support back-in rights terms and conditions before licensing rounds or lease awards.

He added that ensuring back-in rights are cash-funded and limited to strategic minimum holdings and encouraging host community involvement in securing and safeguarding energy infrastructure are critical.