Following industry reform intended to expand the sector, the backtracking of President Muhammadu Buhari on the sale of Exxon Mobil Corp.’s assets may deter investment in Africa’s largest oil producer.
Buhari had initially supported a $1.28 billion offer from Seplat Energy Plc, a Lagos-and London-listed company, for shares in Exxon’s local subsidiary despite opposition from the government-owned Nigeria National Petroleum Company, Exxon’s partner on the blocks with a combined capacity of 95,000 barrels of oil equivalent per day.
Buhari, who serves as both president and oil minister, then changed his mind; blaming a lack of collaboration between government departments and the Nigerian Upstream Petroleum Regulatory Commission; which had previously publicly refused his approval.
The agreement would have been the country’s first significant business announcement; following the passage by Nigeria of comprehensive legislation meant to support oil and gas investments after two decades of unpredictability.
The Buhari administration is attempting to stop production from declining and draw significant investment into the industry, which accounts for more than 90% of export revenue.
Investors who bought Seplat shares after the acquisition was approved are now anxious about how things will turn out.
The mishap is hardly Buhari’s first instance of the oil sector in Nigeria showing signs of indecision. Early last year, Addax Petroleum Corp.’s oil permits were cancelled, reinstated, and revoked once more this year.
Production has reached an all-time low as a result of widespread petroleum theft and insecurity in the Niger River Delta; where the majority of the oil is produced, and the nation is now unable to satisfy its agreed-upon OPEC quotas.
Oil majors are proposing to sell off a portion of their holdings in the most populous nation in Africa.