International Oil Companies (IOCs) operating in Nigeria may divest more than $11.5 billion (about N1.9 trillion) worth of oil blocs by the end of this year, Petroleum Minister Diezani Alison-Madueke has said.
Some of the IOCs have either sold off or are in the process of selling up to 28 oil blocks since 2010.
The oil blocks account for about 2.2 billion barrels of crude worth about five billion dollars or N840 billion.
The minister, who made the disclosure at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, however, allayed fears that the situation could lead to crisis in Nigeria.
Alison-Madueke, represented by the Group Managing Director of the NNPC, Mr Andrew Yakubu, said: “The divestment in the upstream sector of the oil industry by IOCs such as Shell, Total, Agip, Chevron and ConocoPhilips have continued to create an opportunity for participation in the industry by the Nigerian private sector.
“The divestment campaign was highly competitive and attracted interest from a number of indigenous and foreign companies.
“At the end of this, the total number of blocks that are likely to be divested is estimated to exceed 20 with not less than 4 billion barrels of oil equivalent and a monetary value of about $11.5 billion.”
She, however, said that Nigeria’s oil production had remained steady at about two million barrels per day, representing approximately 2.4 per cent of global production.
According to her, gas production has also increased from 2.4 billion cubic feet per day (bcfpd) in 2009 to about 8.0 bcfpd at present, representing about 1.1 per cent of global gas production.
Giving reasons for the divestment, the minister said “the fact is that a number of the 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 oil blocks and have allowed the acreage to go fallow for years without significant development,” she said.
Divestment in Nigeria, according to her, signifies a shift in IOC’s strategy toward the offshore which now accounts for at least 60 per cent of Nigeria’s total production.
The minister, however, assured that the IOC’s “remain very much present in Nigeria as Shell still retains ownership in 34 onshore blocks while Total, ExxonMobil and Chevron are still committing large amounts of capital to assets offshore Nigeria’’.
Allaying fears of possible crisis in the sector, Alison-Madueke said the divestment was changing the onshore corporate landscape and creating material brown field opportunities for upstream players, looking to enter the Nigerian upstream space.
According to her, indigenous production now accounts for about 10 per cent of production in Nigeria, a level which is expected to rise to about 300,000 bpd by 2015.
She said that marginal field operators were expected to produce about 50,000bpd based on current work programmes.
The OTC now in its third day, has up to 2,500 Nigerians participating with some 41 Nigerian companies exhibiting their products and services.