An international business research firm, the Economist Intelligence Unit (EIU), has declared that indigenous oil companies acquiring the assets of divesting international oil companies will not be able to match their investing power.
The EIU, in its newest Nation Report on Nigeria, noticed that the indigenous corporations wouldn’t have the identical monetary energy to take a position because the multinationals, who had been the foremost drivers of the Nigerian oil business since its inception.
It is feared that a web withdrawal of overseas direct funding will likely occur in 2024 because it occurred earlier in the year.
“The broader enterprise surroundings will remain extremely difficult, undermined by corruption, cronyism, rampant insecurity, and a significant infrastructure hole.
“Multinationals are increasingly deciding to give up Nigeria or cut back their presence; we estimate there was a web withdrawal of overseas direct funding in 2023, to be repeated in 2024 as naira losses exert strain on balance sheets carrying massive overseas liabilities,” the EIU stated.
Foxiz NIGERIA remembers that some overseas oil corporations have concluded plans to promote their onshore oil companies to relocate offshore.
Just lately, Shell Plc stated it had “reached a settlement to promote its Nigerian onshore subsidiary, The Shell Petroleum Growth Firm of Nigeria Restricted”, to Renaissance, a consortium of 5 corporations comprising four exploration and manufacturing corporations.
ExxonMobil, Equinor, and TotalEnergies also indicated curiosity in divesting their stakes in Nigeria’s onshore oilfields.
The Minister of State Petroleum (Oil), Heineken Lokpobiri, stated that the divestment by some worldwide oil corporations was a win-win situation, saying it could allow indigenous corporations to develop capability throughout the onshore and shallow water areas.
Additionally, the Governor of Imo State, Hope Uzodinma, had accused the overseas oil companies of not being genuine buyers, questioning their rationale for abandoning onshore for offshore.
Uzodinma reasoned, “It’s a blessing in disguise because the more they go away, the more alternatives the indigenous corporations must take part.”
The report added, “The departure contains oil majors promoting onshore property that is high-cost and susceptible to insecurity, resulting in indigenisation of the sector over time. “Though, in principle, that is constructive for foreign exchange accumulation, native corporations will likely be unable to match the investing energy of outgoing multinationals.
The worldwide analysis agency predicted that the nation’s crude oil manufacturing would rise from 1.23 million barrels per day in 2023 to 1.48mbpd in 2028, saying that “this stays about 250,000bpd beneath the 2019 stage”.
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