Divestments: ‘No, we’re not leaving onshore,’ IOCs tell Nigeria

Sopuruchi Onwuka

Despite the prevailing rave about the exit of foreign multinational companies from joint venture operations with the Nigerian National Petroleum Company (NNPC) Limited, TotalEnergies and Chevron still have a longer outlook for portfolios located onshore Niger Delta.

Shell also says that whereas it has its oil assets in the shopping cart of the Rennaisance consortium, its onshore gas assets would sustain its presence in the onshore terrain where non oil portfolios including gas and renewable energy continue to grow.

Shell, TotalEnergies and Chevron whose delegates spoke at the ongoing Sub-Saharan Africa International Petroleum Expo and Conference (SAIPEC) in Lagos declared the intention of the companies to continue specific operations onshore Niger Delta despite the spate of asset divestments which have sparked peculations about total migration from onshore and shallow water to deepwater.

The Oracle Today reports that assets operated by the government’s traditional partners including Shell, ExxonMobil, Chevron, TotalEnegies and Eni are governed by joint operating agreements under different joint ventures.

However, the oil blocks hosted in operated licences under the joint ventures with the Nigerian National Petroleum Company (NNPC) Limited, now form the subject of divestments as they begin to suffer declining production. And a number of fiscal disputes, unstable operating environment, rising insecurity and consequent cost escalation make strong case for divestment and migration of foreign firms to the safer and less complicated deepwater play.

Since 2008, a strong wave of divestments have swept across the upstream petroleum industry, leading to the exit of companies like ConocoPhillips, Petrobras and Equinor (formerly Statoil). And recent divestment of total JV portfolios by Shell, Agip and ExxonMobil send signals of eventual exit.

According to the Managing Director of Aradel, Mr Gbite Falade, who also spoke at the event, divestments is largely perceived as the japa syndrome among the international oil companies (IOCs) and growth opportunity for indigenous independent oil companies.

He pointed at the huge opportunities emerging from consistent and ongoing divestment of JV stakes by the IOC as the fertile ground that foster upstart and growth of indigenous indepdent companies including Seplat Energy Plc, Aradel Holdings, Oando Energy Resources, Energia, ND Western, and Waltersmith.

Other indiegnous indepdent companies growing on divested assets also include Eland Oil, First E&P, Eroton and many others.

Mr Falade was pointing at the need for idigenous companies to bolster their corporate governance and operatiional efficiency, accounting integrity and overal repuation in psoitioning for access to international and local debt and equity financing. He pointed at the low number of indigenous independents at local and international equity market, noting particular exception of Seplat and Oando which are listed on the local and foreign bourses.

In a separate leadership discussion on Driving Africa’s Energy  led by the Managing Director of Aftrac Limited, Mrs Patricia Simon-Hart, the multinational oil major declared in a rare chorus that they are not leaving the Nigerian onshore portfolios as widely speculated.

Mrs Simon-Hart who is also the Upstrean Director at the Women in Energy Network (WIEN) to time to extract commitment from the international players to their contnued investment in Nigeria’s gas resources in the face of the prevailing global crave fro cleaner energy. She demanded answers on their commitments to environmental footprint reduction and diversification into new energy choices.

In response, the Manging Director of Shell Nigeria Exploratiion and Production Company (SNEPCO) Limited, Mrs Elohor Aiboni, made it clear that the company holds long term vision of deepening its gas and deepwater activities in Africa and especially in Nigeria.

She pointed at five gas development projects which, according to her, signifiies that Shell is not quitting its onshore and shallow water gas assets.

Shell is not going anywhere, she declared.

Mr Aiboni who is also a member of WIEN stated that Shell is deplying technology and exploring new territories in its efforts to overcome challenges of emission reduction; adding that while the company takes advantage of the new Petroleum Industry Act (PIA) to activate new associated gas developments in the country, its till expects improved fiscal provisions to enable new investments in deepwater gas.

“Nigerian gas can power Africa,” she declared, adding that with its robust human capacity Nigeria has to be part of Africa’s significant role in powering the global economy.

On environmental responsibility, Mrs Aiboni stated that Shell has developed associated gas gathering facilities at all its production sites in the country and ensures that methane emission at any of the operated production assets does not exceed 0.01 million cubic feet of gas.

She balmed acute gas supply shortages hitting the power sector and Nigeria Liquefied Natural Gas (NLNG) Limited on securityn breaches that affect gas pipelines across the country.

Mrs Aiboni stated that theplayers in the nigerian petroleum industry continue to engage government on the need to leverage investments in deepwater gas;  noting that deepwater projects rank high in the company’s operations due to zero flare regulation in the terrain.

She called for the right investment climate to enable Nigeria attract the required investments for deepwater gas development.

Chevron’s delegate in the panel discussion, Mrs Michelle Pflueger, stated that the company’s oshore and vast gas operations in Nigeria and West africa remain critical to its long term business porfolios in the continent.

Mrs Pflueger who is Director of Deepwater operations in Africa pointed at the company’s ongoing infill drillings, West African Gas Pipeline infrastructure, Escravos Gas-t-Liquids (EGTL) and a number of other gas facilities as the pegs for Chevron’s long term onshore presence in the country.

In convincing the audience that Chevron is not leaving Nigeria anytime soon, Mr Pflueger pointed out that the company has produced over 8.0 billion barrels of oil equivalents in the country, noting that operated Agbami remains one of the most prolific producers in Africa.

She pointed at Chevron’s farm-in into OPL 215, renewal of three deepwater licences and $1.5 billion investment in OML 47. He highlighted Chevron’s commitment to government’s Decade of Gas programme.

In oointing out that Africa has enormous mineral and human resources to supply all sectors with affordable, available and clean energy required for its development; Mrs Pflueger stressed the need for investors to be provided congenial fiscal terms for the government to realize the critical aspirations in the Decade of Gas.

In his contribution to the discussion on the operating outlook of TotalEnergies in the onshore and shallow water joint venture operations, the Managing Director of Total E&P Nigeria Limited, Mr Mattheiu Bouyer, was very convincing in his declaration that the french oil multinatioal giant would be operating onshore in the medium to long term.

He pointed at the company’s integrated business model in Nigeria which comprises upstream, midstream, downstream and renewable energy portfiolios. He noted that theta the company’s gas portfiolio in the country is hosted in its onshore assets, pointing at the prolific onshore OML 58 lease area, shallow water assets and a number of deepwater interests.

Mr Bouyer stated that TotalEnergies has mapped out significant $6 billion for investment across all portfolios in the compaing years.

He made it clear that gas has become a big leg in TotalEnergies’ investments in Africa, explaing that technology comprising use of drones have been deployed to guarantee zero emission at production sites where, according to him, routine flares have been stopped since last December.

In reiterating the company’s commitment to low energy and low emission, he stated that the company remains focused on  being more efficient with producing cleaner energy. He stated the TotalEnergies is optimistic that fiscal changes would soon happen to make Nigeria competitive for international investments in all forms of energy.