Leading drivers of Nigeria’s local content in oil and gas industry have given testimonies showing how their smartness in acquiring majority of divested infrastructures and assets by International Oil Companies (IOCs) lifted their enterprises.
Business Hilights recalls that since a couple of years back, several IOCs including Chevron, Shell, Total, and Eni successfully disposed of stakes in some onshore and shallow water assets in the country.
Whereas several local investors were skeptical in buying, some of them that acquired the assets are now riding on the platforms to grow in capacity and investments.
Giving insights on how they are now becoming strong forces in the industry at the Aspen Energy Roundtable conference held in Lagos within the week, Seplat and ND Western groups said those assets were good buys.
According to the Chief Executive Officer of Seplat Petroleum Development Company Plc, Mr. Austin Avuru, “about $10.4bn was spent by indigenous oil firms to acquire divested assets in the last seven years”.
“It is not small money; 70 per cent of all of this came out of Nigerian banks. I can tell you that 60 per cent of this money would have gone to the Department of Petroleum Resources (DPR) if the DPR had handled the lease administration properly.
“But this is all the money that we as indigenous companies, using Nigerian banks, paid to the IOCs. I hope that will be a lesson for the next lease administration, bid rounds and renewals.”
While noting that time has come for Nigeria to manage her resources to “maximum value that is captured without expropriation,” he averred that “We are the victims knocking our heads together and paying three times more for these leases because we have no option. There are no leases available. So, we knock our heads together and then the IOCs are smiling. We could have paid one third of what we paid to the government and everybody is happy”.
Reliving his company’s experience, the Managing Director of ND Western, Mr. Layi Fatona, said the divestment had grown a portfolio of new entities in the nation’s oil industry such as Seplat and ND Western.
He noted that “But the most important thing is that when you look at the spending, all of the money came mostly from the Nigerian banking system. And I ask a pertinent question: Shall we call this capital flight? All that money that was taken from the Nigerian banking system by essentially indigenous E&P companies paid to the IOCs left the shores of this country”.
However, there are indications that IOCs are expected to relinquish interest in over $12 billion (N4.3 trillion) oil blocks, which are expected to expire between 2017 and 2019.
Before now, about 17 Niger Delta onshore Oil Mining Leases (OMLs) belonging to the Shell Petroleum Development Company of Nigeria Limited (SPDC) will expire in the next two years.
Analysts say should in case IOCs do not renew the licences, it opens up more opportunities for indigenous investors to buy over these assets and boost the participation of Nigerians in the nation’s petroleum industry.
Three of the IOCs have divested from 24 OMLs in the last three years, through which indigenous oil firms have invested about $10 billion to acquire the assets.