Global oil firms exit Nigeria as local companies seize control

 A noteworthy transformation has quietly unfolded in Nigeria’s oil industry over the past year, marked by the exodus of international oil companies from various parts of their operations within the country. The latest development came at the end of last month when Norwegian oil company Equinor finalized the sale of its Nigerian entity to the relatively unknown local firm, Chabal Energy. This move signified the conclusion of Equinor’s three-decade-long association with Africa’s largest oil producer.

Equinor’s exit is not an isolated incident; it aligns with a broader trend. In September, the Italian company Eni announced its decision to sell its onshore operations to the local entity Oando. Preceding this, the Chinese company Addax sold its four oil blocks to the Nigerian state oil company, NNPC. Additionally, there are ongoing plans for Exxon Mobil, a U.S. giant, to sell four onshore oil fields to Seplat, an energy company dual-listed in Lagos and London, for approximately USD1.3 billion. Although former President and Oil Minister Muhammadu Buhari initially approved Exxon Mobil’s deal in August 2022, he later reversed the decision a few days afterward, and the deal is still pending completion.

Similar circumstances surround the British company Shell, which has expressed a desire to divest its investments from onshore fields, potentially generating around USD3 billion. However, legal issues have impeded Shell’s progress. In most instances, major international oil companies are strategically retreating from onshore and shallow water assets due to rampant theft and sabotage that have plagued Nigeria’s oil industry for the past five years.

Environmental concerns, particularly regarding spills and their economic repercussions, have cast a long-standing shadow over these onshore assets. International oil companies, weighing the associated challenges, have increasingly deemed the endeavor not worth the trouble. Consequently, the industry has witnessed a shift as these companies pivot towards offshore assets perceived as more profitable and less susceptible to the risks and disruptions that characterized their onshore counterparts.