It’s open season on Shell, Exxon Mobil and Chevron assets as they divest from Nigeria’s onshore and shallow water oil assets.
Onshore oil assets are found on land, while shallow water assets are found underneath bodies of water less than 150 metres deep. Therefore, extraction and production occur on land or shallow water (creeks). However, international oil companies (IOCs) are still keeping their deep offshore assets found at sea.
Thanks to the local content act, this is good news for local oil companies that top the list of prospective buyers. The local content act aims to increase Nigerian oil and gas industry participation by setting minimum thresholds. Nigerian companies have a fair shot at increasing operations and playing more significant roles in the oil and gas sector thanks to the act. This means local companies like Seplat and Sahara energy can increase their oil production and revenues to contribute more meaningfully to the Nigerian economy. Additionally, these expansions could create more job opportunities for Nigerians as local companies are more likely to employ local talent and empower more Nigerians to attain high ranking positions in the oil and gas industry.
Naturally, Nigerian oil companies have reported acquisitions of assets and shares of international oil companies (IOCs). Last year, in January 2021, the Trans-Niger Oil & Gas Limited (TNOG) and Transcorp plc, owned by Nigerian billionaire Tony Elumelu, acquired 45% of OML 17 (an oil block) by buying up stakes from Shell (30%), TotalEnergies (10%) and Eni (5%). And this year, Seplat announced that it was in the advanced stages of acquiring the entire share capital of Mobil Producing Nigeria Unlimited (MPNU), Mobil’s onshore unit, from Exxon Mobil.
Essentially, it’s acquisition season in the Nigerian oil and gas industry. Interestingly, there have been quite a number of popular acquisitions