Oando says IOCs Divestments Create Opportunity for Nigerian Energy Companies

Nigerian energy companies now have opportunities to play major roles in the development of the domestic oil and gas industry with new investment windows being created by divestments by international oil companies (IOCs), according to Oando Energy Resources.

General Manager, Commercial, Oando Energy Resources, Akinbambo Ibidapo-Obe, who made these remarks in Lagos at the Society of Petroleum Engineers (SPE) 2024 Nigeria Annual International Conference and Exhibition (NAICE), noted that the divestments by IOCs were a mix of opportunities for the indigenous energy companies.

The three-day conference with the theme “Petroleum Industry Value Chain Optimisation: The Inevitability of Midstream and Downstream Development,” was sponsored by IOCs and indigenous energy companies like Oando, Seplat, and Aradel, among others.

Recall that Oil majors in Nigeria for over a decade have pursued divestment strategies, with the aim of exiting the shallow water and onshore sectors while maintaining interests in the deep waters and downstream sectors.

In February 2022, Seplat Energy announced an agreement to acquire ExxonMobil’s entire share in its shallow water business—Mobil Producing Nigeria Unlimited (MPNU). In September 2023, Oando revealed that it had signed a deal to acquire Eni’s subsidiary, Nigerian Agip Oil Company Limited (NAOC). In November 2023, Norwegian oil company Equinor announced that it had sold its Nigerian entity to Chappal Energies, the end of Equinor’s three-decade association with Africa’s largest oil producer, to mention a few.

A key highlight of the conference was the topical issues workshop, a session that explored the theme “The Outlook of the Nigerian Oil and Gas Industry, Post IOC Divestment and Exits: Opportunities and Challenges”.

The session explored the recent spate of IOC divestment and its implications for the country and indigenous players, providing valuable insights and strategies for the future.

At the session, Ibidapo-Obe shared Oando’s strategies and preparations for the IOCs divestment, highlighting the company’s proactive approach.

Ibidapo-Obe described the current spate of divestments as an inevitable reality indigenous companies have been preparing for.

In his words: “Where we are now is a confluence of opportunity and preparation. The government has been deliberate about ensuring the transfer of knowledge from the IOCs to the indigenous companies over the years. Oando, along with other indigenous companies, has also proven its technical abilities to operate and manage these assets through the marginal fields programme and earlier divestments. It is now time for indigenous companies to step up, prove themselves on this global stage and drive significant growth and innovation in the industry.”

Other plenary session themed ‘Unlocking Upstream Value: Developing Markets, Trade Access, and Facilitating Partnerships in the Midstream and Downstream’ was deliberated by experienced panelists.

Their insights and discourse culminated in a wealth of perspectives, strategies and recommendations for enhancing value creation across the Nigerian oil and gas industry, including specific strategies for developing markets,  as well as enhancing trade access, and fostering partnerships.

General Manager, SubSurface, Oando Energy Resources, Babafemi Onasanya, maintained that partnerships were not just critical, but essential to the development of the sector.

Onasanya, who represented Executive Director, Oando Plc and Chief Operating Officer, Oando Energy Resources, Dr. Ainojie’ Alex’ Irune, emphasized on the industry’s reliance on Joint Venture (JV) partnerships between operators and the Nigerian government, as well as the importance of collaboration and shared goals.

“As more indigenous players take up prominent roles in the industry, they will need to secure key partnerships in critical areas for efficiency and sustainability. The first necessary partnership is with financial advisors/offtakers to either fund the capital-intensive nature of the business, or to provide advisory to source and secure funding. The second is a deliberate, engaging and adaptable partnership with host communities to encourage better dialogue and impact. Lastly, we need strategic partnerships with technology partners to address different areas of specialization,” Onasanya added.

In attendance at the workshops, panel sessions, an award and gala night and networking were the Honourable Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri; the Honourable Minister of State for Petroleum Resources (Gas), Ekperikpe Ekpo; the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari; the Chief Executive of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), Farouk Ahmed; and the Chief Executive of the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), Engr. Gbenga Komolafe, and other stakeholders.

The conference also featured a Young Professionals Workshop and a Women Leadership Program aimed on developing demographic-specific policies and recommendations to boost industry participation and value.