Nigeria To Earn $11.5 Billion From Divested Oil Assets

ABOUT N1.9 trillion or $11.5 billion will expectedly accrue to Nigeria from oil blocks divested by some International Oil Companies (IOCs) before the end of the year, the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has disclosed.

The minister explained yesterday at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, United States (U.S.), that some of the IOCs have either sold or were in the process of selling about 28 oil blocks since 2010.

Speaking through the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Andrew Yakubu, she added that the total assets sold so far is estimated at about 2.2 billion barrels of oil equivalent of hydrocarbon reserve, and worth about $5 billion (N840 billion).

She was quick to allay a possible backlash resultant from the divestment, saying rather that the action leading to crisis in the sector would serve to open up the latent potential of the indigenous oil firms to take up the challenge and further increase government’s efforts at domesticating the oil and gas sector.

“The divestment in the upstream sector of the oil industry by the IOCs such as Shell, Total, Agip, Chevron and ConocoPhilips have continued to create an opportunity for participation in the industry by the Nigerian private sector,” she noted. “The divestment campaign was highly competitive and attracted interest from a number of indigenous and foreign companies.

“By the end of this, the total number of blocks that are likely to be divested is estimated to exceed 20, with no fewer than four billion barrels of oil equivalent and a monetary value of about $11.5 billion.”

However, she noted that the nation’s oil production has remained steady at about two million barrels per day, representing approximately 2.4 per cent of global production. According to her, gas production has also increased from 2.4 billion cubic feet per day (bcfpd) in 2009 to about 8.0bcfpd now, representing 1.1 per cent of global gas production.

Allaying fears of possible crisis in the sector, Alison-Madueke said the divestment was changing the onshore corporate landscape and creating material brownfield opportunities for upstream players looking to enter the Nigerian upstream space.

She stressed that indigenous production now accounts for about 10 per cent in the nation, a level forecast to rise above 300,000bpd by 2015, while marginal field operators are expected to produce about 50,000bpd based on current work programme.

She explained further: “The fact is that a number of the IOCs are moving into more challenging frontiers in the deep offshore and are leaving the onshore blocks, which they consider less profitable. In addition, some of them have been sitting on oil blocks and have allowed the acreages to go fallow for years without significant development.”

According to her, divestment in Nigeria signifies a shift in IOCs’ strategy towards the offshore, which now accounts for at least 60 per cent of Nigeria’s total production.

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