Local Nigerian Firms Acquire Spoils of International Oil Divestments, with Infighting Along the Way

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--About 8.8 billion barrels of crude oil will have been traded at the end of the current Nigerian assets divestment process by international oil companies (IOCs), according to the country's Department of Petroleum Resources (DPR).

George Osahon, DPR director, said that about 24 trillion cubic feet of gas and 20 trillion cubic feet of associated gas also will have changed hands. Osahon and the federal government are said to be impressed by the performance of local firms that have acquired some of the assets.

The divestments constitute a significant volume of the nation's reserves.

"The credit goes to the independent producers," Osahon said. "They have not done very badly in terms of involvement in terms of gas commercialization. Most of the real gas commercialization we are seeing today is by independent producers."

The aggressive participation in divestment by the local companies shows that Nigerians can achieve results if they are determined, he added.

Nigerian companies that are currently producing only 20,000 barrels a day are buying up divested blocks in the country, and the government will continue to support local capacity building, assuring that local companies will be assisted in taking over divested blocks.

Osahon noted that the government was particularly impressed that the local firms are having good community relations with host communities in their operations, compared with the relationships when the oil blocks were in the hands of the IOCs.

But at the end of this good-news message comes an "uh oh" moment of truth: The director noted that local firms were involved in in-fighting, which is delaying the process.

"I saw a lot of things, especially people fighting over unnecessary issues, going to court over issues that can be settled over the table," he said "'You give, I take-I give, you take.' The first thing I tell them during our meetings is that 100% of zero is zero. So let us share the profit so that we can make something out of it."

Industrial Info notes that in the above post-divestment scenario, there could be a pipeline of contracts for international technical service companies and expediters to keep the crude flow developing--acting, of course, with the local companies under the new umbrella of good community relations.

For related information, see March 11, 2014, article - Glencore Xstrata Might Snap Up Shell's Nigerian Assets

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