IOCs to divest U.S.$11 billion worth oil blocks

In a continuous divestment spree which began in 2010, the international oil companies (IOCs) are expected to divest over 20 oil blocks with not less than 4 billion barrels of oil equivalent (boe) per day and a monetary value of about $11.5 billion before the end of 2014.

This was disclosed yesterday by the minister of petroleum resources, Mrs Diezani Alison-Madueke, while delivering a keynote address with the theme “Assets Divestment in Nigerian Oil and Gas Industry: Opportunities and Challenges” at the ongoing 2014 Offshore Technology Conference (OTC) in Houston, Texas, USA.

This is even as she disclosed that already the total assets divestment by the IOCs is worth about 2.2 billion BOE of hydrocarbon reserves at an estimated monetary value of at least $5 billion. Shell, Total, Agip, Chevron and ConocoPhillips have led the pack of divesting majors.

She said, “By the end of this year, the total number of blocks that are likely to be divested is estimated to exceed 20 with not less than 4 billion BOE and a monetary value of about $11.5 billion.”

The minister however allayed fears that the spate of divestment would not lead to crisis in the nation’s oil and gas industry but rather said the divestment campaign by the majors is changing the onshore corporate landscape and creating brownfield opportunities for upstream players looking to enter the Nigerian upstream space.

Represented by the group managing director of the Nigerian National Petroleum Corporation (NNPC), Engr. Andrew Yakubu, the minister maintained that the divestments signify a shift in the IOCs’ strategy towards the offshore which now accounts for at least 60 per cent of Nigeria’s total production.

She also noted that the divestment has continued to create an opportunity for participation in the industry by the Nigerian private sector and added that despite the divestment, the IOCs still remain very present in Nigeria with Shell still retaining ownership in 34 onshore blocks.

Giving reasons for the divestment, the minister said “the fact is that a number of these IOCs are moving into the 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 acreages to go fallow for years without significant development,” she added.