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American oil major, ExxonMobil has declared force majeure on oil lifting from several ports in Nigeria.
This follows reported industrial action by the company’s in-house workers union, the company said, in a statement yesterday. LEADERSHIP reports that this will lead to another set back to the country which is a member of the Organisation of Petroleum Exporting Countries (OPEC), and had lost its status as Africa’s top oil producer last year when businesses such as Shell Plc and TotalEnergies began to reduce their investment due to extensive corruption and security concerns.
ExxonMobil has been trying to sell $1.2 billion in shallow-water assets in challenging Nigeria, the company told Reuters in February, while keeping deep-water assets further from the coast. Spokesperson, Michelle Gray in a statement on Monday said that the company was exploring ways of resolving the issues with its workers. “We will continue to take all reasonable actions necessary to resolve the impasse as soon as possible,” Gray said on Monday.
In 2022, President Muhammadu Buhari reversed his earlier authorization of Seplat Energy Plc’s $1.28-billion purchase of Exxon Mobil Corp. assets and backed the energy regulator’s decision to reject the deal. Hours after Buhari approved Seplat’s acquisition of Exxon’s shallow-water business on August 8, 2022 the Nigerian Upstream Petroleum Regulatory Commission, NUPRC, contradicted the decision , who also serves as oil minister.
Chief Executive Officer, Gbenga Komolafe, said in a statement that its previous rejection of the proposed transaction remained in place. Exxon began oil operations in Nigeria in the 1950s and, alongside Shell, was responsible for the creation of the oil industry that has become the bedrock of the Nigerian economy.
Oil production in the swamps of the Niger Delta in the south of the country has generated billions of dollars in revenues for the companies and the government but has also resulted in corruption, violence and criminality that international oil groups have found increasingly difficult to manage.
In response, ExxonMobil and Shell, in the past two years, have announced plans to end their onshore operations, while continuing offshore projects. The planned divestments provide an opportunity for local producers such as Seplat to expand.
But Exxon and Shell have also been criticised for leaving behind a swath of environmental, social and operational problems. Shell’s planned divestment of its Nigeria assets has been put on hold pending the resolution of its appeal against a court order to pay $1.95bn of damages after an oil spill in 2019.
Seplat reached an agreement to buy Exxon’s shallow water assets in February last year but the deal appeared in doubt after the Nigerian National Petroleum Compant Limited, the state oil company, secured a court order barring Exxon from selling the four licenses.
Exxon operates the permits in a partnership with NNPCL which had sought to block the transaction, arguing that it had a contractual right to pre-empt any sale.
Seplat, which is listed in both London and Lagos, had earlier welcomed Buhari’s decision, describing the deal as “a transformational transaction” that would create “one of the largest independent energy companies” on both stock exchanges.
The acquisition would have increased Seplat’s oil production by roughly 95,000 barrels a day, tripling its output. Buhari earlier also said the deal would also boost Nigeria’s ambitions to receive more foreign direct investment in the energy sector.
In the short-term, Exxon and Seplat are expected to work together to boost production at the four fields, thereby helping Africa’s largest oil producer meet its OPEC production quota of 1.8mn barrels a day, it added. Nigeria has struggled with this target because of pipeline vandalism and theft in the Niger Delta region.
