Oil industry stakeholders explore opportunities from IOC divestments
Indigenous operators in Nigeria's oil and gas sector are pushing for improved infrastructure and financial backing to seize the opportunities arising from the divestiture by international oil companies (IOCs).
They argue that this divestment could release over 500 million barrels of oil and three trillion cubic feet of gas reserves, contingent upon effective government management of the transition.
Operators raised alarm over a decade and a half of inadequate investment, which they claim has caused Nigeria’s oil output to drop from 2.6 million barrels per day to 1.5 million.
They are calling for a revised regulatory framework and a reassessment of the Petroleum Industry Act (PIA) to support the growth from fewer than 15 operators to nearly 50, while addressing the challenges posed by energy transition and financial limitations, as reported by Arise News.
Among the speakers at the Pre-conference Workshop of the Nigerian Association of Petroleum Explorationists in Lagos were Mr. Adegbite Falade, CEO of Aradel Holdings; Mr. Sam Ezugworie, COO of Seplat Energy; Mrs. Uju Ifejika, Chairman/CEO of Britannia-U; and Mr. Osayande Igiehon, CEO of Heirs Energies Limited.
The theme of the workshop was “Leveraging Divestment and Local Content Capacity to Enhance Nigeria’s Oil and Gas Industry: Challenges and Opportunities.”
In his speech, Falade discussed the implications of IOCs’ divestment, suggesting it should be seen as an opportunity for Nigeria.
He urged stakeholders to take advantage of these changes for the country’s benefit.
He remarked, “Divestment opens the door for unlocking over 500 million barrels of oil reserves and more than three trillion cubic feet of gas reserves in Nigeria. Therefore, divestment can be beneficial to the sector, and it is essential to embrace it.”
He pointed out that intentional under-investment in the oil and gas industry over the past 15 years has led to the reduction in production.
The CEO of Aradel emphasized the need for a revision of the regulatory framework governing Nigeria's oil and gas industry, noting that regulators have not adapted over the last two decades in response to the industry expanding from around 15 operators to its current 50.
Seplat's COO, Ezugworie, shared his dismay that Nigeria’s oil production remains stalled at just 1.5 million barrels per day despite an increase in local operators.
He mentioned that IOCs are shifting their focus from onshore and shallow exploration to offshore and deepwater operations.
Ezugworie stressed the necessity of capitalizing on this divestment opportunity to encourage the development of local companies that can compete with the “Big 5”—Seplat, Aradel, First E&P, Waltersmith, and Platform Petroleum.
Likewise, CEO of Britannia-U, Ifejika, argued that industry regulators must proactively address the new challenges faced by Nigeria's upstream petroleum sector.
She pointed out that among the 24 companies that won marginal fields during the 2003/2004 bid round, only seven have found success.
He also raised concerns about whether the Petroleum Industry Act (PIA) has successfully attracted substantial investment since it was enacted in 2021. Ezugworie proposed that establishing Key Performance Indicators (KPIs) is vital for assessing the effectiveness of the industry regulations.
She observed that the most recent marginal field bid round held in 2020 has not produced encouraging outcomes since no awarded companies have reached first oil.
Ifejika urged the government to address the downturn in investment and production within the oil and gas sector by implementing favorable fiscal policies and adopting a realistic regulatory approach.
In his presentation, CEO of Heirs Energies Limited, Osayande Igiehon, emphasized the significant transition in Nigeria’s oil and gas sector from international oil companies to local operators.
He noted that the trend of divestment, which began two decades ago, has grown in both scale and complexity.
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