‘IOCs to divest 250,000b/d worth of crude oil this year’
ricewaterhouse Coopers, PwC, a management and advisory services firm, has estimated that international oil companies operating in Nigeria would divest at least 250,000 barrels per day worth of equity in onshore and shallow water producing assets in the oil producing Niger Delta region by the end of this year.
The firm said in its review of the oil and gas industry in Nigeria in 2014 that these divestments represent the single largest opportunity for indigenous companies to participate in the upstream oil and gas industry.
According to the firm, the transfer of operatorship to the buyers of these assets will go a long way in demonstrating government’s commitment to the local content policy. This will in turn unlock enormous local contractor, financing and other opportunities.
Besides, it said that public scrutiny and regulatory compliance in the post-BP-Deepwater Horizon environment, growing regulatory compliance requirements in many developing countries post the April 2010 Deepwater Horizon disaster in the Gulf of Mexico, are forcing companies to recognise Security, Health, Environment and Quality (SHEQ) as a serious area of business focus or face the consequences of non-compliance by way of significant fines and penalties.
Multinational oil companies, findings of the firm revealed, are also driving SHEQ requirements within their own companies as they require their business units around the world to implement their stringent policies no matter where they operate.
The review further said that gas flaring is also expected to continue to be a challenge, though there has been some improvement with some companies reporting a reduction in flaring volume from their facilities by about 75 percent between 2003 and 2012 and flaring intensity by around 60 percent over the same period.
According to the review, some gas to liquid projects that are coming onstream are expected to make positive impact as regards flared volume. It added that there is a need however, for increased investment in gas utilisation and the creation of a viable market for gas.
The government is expected to take the lead on this. It said the primary concern of operators in National Oil company verses IOCs partnership, is centered around significant cuts to the budget and delay in budget approval as there is also the consequent challenge of alternative funding.
But the review noted that the outlook for the industry is positive as operators can look forward to an exciting and dynamic future with an ever-changing competitive landscape characterized by divestments and new acquisitions as new market entrants continue to seek a share of the industry’s significant growth potential.