Local oil firms invest over $13bn on asset acquisitions

The indigenous oil and gas firms in Nigeria have made an investment of over $13 billion on Assets acquisition in the oil and gas industry, this is according to the head of Nigeria’s IPPG, Abdulrazaq Isa.

Local firms in the sector have significantly acquired the necessary competences and advancing investment in the country’s onshore and shallow water frontiers.

According to the Chairman of the Independent Petroleum Producers Group (IPPG) Abdulrazaq Isa, indigenous firms have made asset acquisition deal between $13 billion and has fully positioned themselves to acquire divested assets by oil majors.

Isa, who is also the Chairman of Waltersmith Group, during an interview said the independent oil & gas companies are ready and very capable in this regard adding that they have a proven track record and have demonstrated technical, operational and financial capacity to manage previously divested IOC assets.

Since the major IOCs divestment in 2009, over 15 indigenous independents acquired divested assets enabling contributions from indigenous companies to significantly grow from about 3 per cent to 18 per cent.

He said the group’s aim in the short to medium term should be on increasing their contribution to 30 per cent – 50 per cent level at 3 million barrels of oil a day, MMBOPD national target for crude oil production.

He said that with the next round of IOC divestments, likely to happen in the next 2-3 years, the on-shore and much of the shallow water assets will be dominated by indigenous companies.

“This next wave of IOC divestment also offers the opportunity for us to expand and deepen our capabilities and spearhead the country’s energy security drive.

“Indigenous players remain best placed to guarantee a steady flow and incremental investments in adding value to these assets with over $11billion and $13 billion spent on acquisition and CAPEX cost respectively even in the face of the energy transition drive.

“I have no doubt that independent companies, particularly our members, are more than ready and capable to step into the shoes of the IOCs.” Isa said.

Continuing, he said, “Moreover, across the onshore and shallow water acreages, we have been successful in managing the perennial community restiveness issues through the following: Creating direct and indirect employment and effective engagement of host communities; Adoption of successful model to effectively engage host communities across areas of operation. The result has been minimal disruptions in operations.”

Speaking on energy transition, he said the IPPG is fully aligned to global decarbonization initiatives and adoption of renewable energy. However, he noted that in the face of energy poverty and economic stagnation, Sub-Saharan Africa (SSA) decarbonisation effort cannot be at the expense of growth and development.

He added that the SSA generates the lowest carbon emissions in the world, less than 2 per cent of global emissions, and a blanket financing ban on all fossil fuel project is detrimental to the growth of SSA economies.

He said Nigeria’s and much of Africa’s focus will remain on providing affordable and reliable energy to its population using its hydrocarbon resources in the short to medium term.

“With the current global de-carboinsation drive, there is an urgent need to focus on gas as a transition fuel and to power our economy (promoting the country’s industrialisation drive, addressing energy poverty, etc.) and ensuring Nigeria remains on a path of low-carbon growth whilst rapidly transforming its economy,” he stated.

According to Isa, energy self-sufficiency should be the short to medium term priority and as the energy mix evolves over time in line with the global energy transition drive, “we need to ensure the fundamental thrust of our energy policies are geared towards our energy security and growth of our economy.”

He applauded the Federal Government for the declaration of 2021 – 2030 as the ‘Decade of Gas’ to fully utilize and commercialize the nation’s abundant gas resources, as he observed that significant progress has been made to promote domestic gas utilization and end gas flaring (e.g. AKK pipeline and FID on Nigeria LNG Train 7, etc), and the group is also positioning to support the government in this effort of making gas a viable and scalable transition fuel for Nigeria.

On oil theft he said the situation is fast becoming unsustainable and a major threat to our businesses.

“The sheer level of theft is unprecedented. In 2021 alone, producers in certain parts of the Niger Delta suffered losses between 15 per cent to as high as 90 per cent. Such monumental losses attributable to theft are a major threat to our businesses, revenues to government as well as to national security,” he said.

Isa, disclosed that the huge cost incurred on security is also adversely affecting Unit Operating Cost (UOC) targets of $10 per barrel, while the escalating security and repair costs due to vandalization of key oil & gas assets is a major concern.