A wave of divestment of oil and gas assets by international oil companies (IOCs) ignited interest from different stakeholders in the Nigerian oil and gas industry. The IOCs who account for more than 60 per cent of the nation’s daily crude production started frantically divesting their hitherto prized assets, for reasons which bordered on onshore operational and security risks; re-balancing of their Nigerian portfolios towards the offshore; growing regional competition in the West African upstream; global capital re-allocation in the upstream industry and regulatory uncertainty fuelled by the delayed PIB. Others were the problem of insecurity and sabotage to infrastructure as a result of warring communities, to mention just a few.
As at 2013, IOCs had sold onshore and shallow-water producing assets valued at over $10billion. UK gas group BG Group reportedly kick-started the divestment programme in 2009 when it announced a pullback in financing for the Olokola LNG project on which it partnered with Chevron, Shell and NNPC and sold rights in three Oil Prospecting Licenses (OPLs). Shell followed suit in 2010 launching a divestment programme that eventually resulted in the sale of eight Oil Mining Licenses (OMLs) to indigenous Nigerian companies by the end of 2012.
The first of these was completed in December 2011 with the acquisition of a 45 per cent stake in OML 26 from SPDC, Total E&P Nigeria Ltd. and Nigeria Agip Oil Company (NAOC) by First Hydrocarbon Nigeria (FHN), backed by London-listed Afren Plc. Since 2012, several oil companies have announced planned asset sales in Nigeria. The momentum continued in 2013 when Shell announced it would divest a further four assets in Nigeria; OML 13 and 16, both onshore, as well as OML 71 and 72, both offshore.
The divestments have not only been limited to the upstream. The last decade has also witnessed divestments in the downstream sector.