By Clara Nwachukwu & Sebastine Obasi

Houston (Texas)— Nigeria’s Petroleum Minister, Mrs Diezani Alison Madueke, has said that the total value of assets divested by the International Oil Companies, IOCs, operating in the country is estimated to worth about $11.5 billion by year end.

The amount is derived from the 20 oil blocks with about four billion barrels of oil equivalent that the IOCs have been dropping since 2010, when the divestments programme began, led by the Nigerian unit of Anglo Dutch Shell joint ventures.

The minister disclosed this at the panel session with the theme Asset Divestment in Nigerian Oil and Gas Industry: Opportunities and Challenges, organised by the Petroleum Technology Association of Nigeria, PETAN, at the ongoing Offshore Technology Conference, OTC, in Houston Texas.

At the session, sponsored by the Oilserv/Frazimex Group, the Minister, who was represented by the Group Managing Director, Nigerian National Petroleum Corporation, NNPC, Mr. Andrew Yakubu, she said currently, assets divestments by the IOCs are worth about $5 billion or about 2.2 billion barrels of oil equivalent working interest.

“Divestment ‘ll boost economy”

She said the spate of divestment will not hurt the country’s petroleum industry and economy as feared, but will boost the Federal Government’s local content policy.

With Nigerian being an oil based mono product economy, there have been fears about the impact of these divestments on the economy, especially on government’s revenue drive, with oil accounting for over 80 percent of Nigeria’s revenues and foreign exchange earnings.

She said: “Let me allay your fears that the spate of divestments would not lead to crisis in the nation’s oil and gas industry. Rather, the divestment campaign by the majors is changing the onshore corporate landscape and creating material brown field opportunities for upstream players looking to enter the Nigerian upstream space.”

Local content development

However, Alison Madueke insisted that the divestments are helping to boost local content drive, as Nigerian companies now have opportunities to develop capacities, while also increasing production from oil blocks, otherwise lying fallow for years.

She argued, “the divestments in the upstream sector of the oil industry by the IOCs such as SPDC, Total, Agip, Chevron and ConocoPhillips have continued to create opportunities for participation in the industry by the Nigerian private sector.

“Indigenous independents can take over the spare capacity that has been shut in by the IOCs. The indigenous Nigerian companies have been presented with the opportunity to develop local operatorship capacity and boost local production and consequently grow into major upstream players.”

Reason for

divestments

The minister noted that the asset divestments are deliberate measures taken by the IOCs for portfolio management, even as it is believed to be on account of harsh operating environment. According to her, “the reasons for the spate of divestments by these oil majors were many and varied. The fact is that a number of these 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 the oil blocks and have allowed the acreages to go fallow for years without significant development.”

Alison Madueke further noted that there had been some divestments in the offshore area, with Nigerian unit of French oil major, Total, selling its 20 percent stake in OML 138, Offshore Usan Field, to Sinopec in November 2012 for $2.5 billion.

Shell also disclosed last year that it planned to sell two of its offshore assets— OMLs 71 and 72.