Victor AHIUMA-YOUNG

Divestment in the Nigeria’s oil and gas industry is worrisome due to the level of attendant job losses and other losses that accompany the process. Many of the International Oil Companies, IOCs, operating in the country have sold some of their assets to other interest parties, who may not have the technical and financial wherewithal for the exploration and exploitation activities in the onshore and shallow water production assets.

Presently, IOCs account for more than 70 per cent of Nigeria’s daily crude production. It is estimated that the IOCs operating in Nigeria would have sold at least 300,000 barrels per day (bpd) worth of equity in onshore and shallow water producing assets in the Niger Delta. This is estimated in the region of at least $5 billion by the end of 2014.

The oil and gas assets within the divestments programme have largely been those assets notably in the onshore and shallow water areas.The Shell Petroleum Development Corporation (SPDC) has included two offshore blocks in its divestment programme. Wilbross, Addax, Eni (Agip) and Total, have engaged in the process of selling off their assets to other stakeholders.

Recently, ConocoPhillips sold its stake in the Brass LNG project, as well as other upstream assets and a power plant to Toronto-listed Oando Energy Resources for $1.79billion. Also, Chevron is now in the midst of a divestment programme involving five shallow water blocks, estimated to hold as much as 250million of oil reserves.

Some of the reasons that have been given for the many assets sale over the past 36 months, range from operational and security challenges in Niger Delta region, portfolio rationalisation, and regulatory uncertainties from the non-passage of the Petroleum Industry Bill (PIB)

The fear expressed by some industry watchers is that the current wave of divestments could portend a mass wave of IOCs’ exodus from Nigeria due to inclement operating environment. But it does appear that this fear is unfounded given the fact the IOCs shift towards offshore production, which now accounts for at least 80% of Nigeria’s total oil production.

But labour unions greatest concernsare the loss of jobs and the increase in contract and casual employment that result from the divestments. The unions lament the instability and uncertainty pervading the sector on account of theIOCs’s divestments, saying that the incident is not only affecting the national income but also job creation.
They blamed government’s inadequate guidelines for divestment process in the oil and gas industry, thus giving room for massive job losses and casual staffing without opportunity for protective conditions of employment through unions.

The newly elected President of the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, Comrade Francis Olabode Johnson has vowed that the union will not tolerate any management that will not follow due process in its divestment process.

PENGASSAN claimed that 40 per cent of its membership have been lost to the various divestment activities since the waves became stronger in 2012, adding that the number may be on the increase with the alleged plan by Chevron to release 55 per cent of its workforce to the labour market.

Against this backdrop, PENGASSAN has called on the Federal Government to make it mandatory for IOCs to be listed on the Nigerian Stock Exchange, NSE.
This move, according to the union will help to check the spate of divestments in the oil and gas industry as well as protect jobs.

“There is the need for Nigeria to assume control of the exploration, exploitation and production activities in the oil and gas sector, and to harness the potential of this most strategic industry in order to generate more value-added jobs. The spate of divestments by the IOCs is alarming, and creates a grave danger not only for the industry but also for employment situation and the country’s economy.