By Chibuike Okafor
The Nigerian Content Development and Monitoring Board (NCDMB) has disclosed that two major divestments are currently on its cards.
The Executive Secretary of the Board, Engr. Simbi Wabote, who made this known at a breakfast meeting with some editors and directors of broadcast stations held at Abuja Continental Hotel, said that the action would change Seplat Plc and Oando Plc from midsized players into big-time operating companies.
He disclosed that the Board chose the theme of the meeting; “Sustaining Nigerian Content Amidst Divestments to Indigenous Oil Companies: The Role of the Media,” to reflect the growing profile of Nigerian operating companies through their recent acquisitions or planned acquisitions of key assets divested by some international oil companies.
Giving details of the development, he said: “Seplat Plc is hoping to conclude the acquisition of the entire share capital of Mobil Producing Unlimited (MPNU) from ExxonMobil Corporation, a deal that would triple Seplat’s production and add 95,000 barrels of oil equivalent per day.
“Similarly, Eni signed an agreement last month to sell Nigerian Agip Oil Company Ltd to Oando Plc, a deal that will include NAOC’s 4 onshore blocks, the Okpai 1 and 2 power plants, and two onshore exploration leases. The transaction will double Oando’s reserves to 996 million barrels of oil equivalent.”
Wabote explained that what was playing out was the implementation of the oil majors’ strategic move to sell down their onshore assets in Nigeria and concentrate on their offshore operations, where they retain a competitive advantage and contend with minimal human interferences.
“The implication is that we should expect other majors to soon offer their onshore assets for sale, while many other Nigerian independents will have a shoe-in.
“The ongoing and planned divestments are big accomplishments for Nigerian content development. They are bold statements that Nigerian indigenous operating companies have come of age and have acquired the technical, managerial, and financial capabilities to play in the big league,” he said.
The NCDMB boss said that they were proud “that we have moved from near zero participation in the oil and gas sector to the point that our indigenous operators such as SEPLAT, AITEO, EROTON, and others are now responsible for 15 per cent of our oil production and 60 per cent of our domestic gas supply.
“With this planned acquisition, the share of local firms in crude oil production could reach 30 per cent or more in a short while.”
Wabote said that it was heart-warming to see Nigeria’s local operating companies deploying ingenious techniques to double and sometimes triple production volumes from their acquired assets and apply homegrown solutions in addressing host community concerns.
“But beyond the positives, it must also be observed that the divestment of producing assets to indigenous players poses significant challenges for the implementation of the Nigerian Oil and Gas Industry Content Development Act.
“The worries are predicated on research findings and our experience in implementing the NOGICD Act in the past 13 years which indicates that indigenous firms, especially the indigenous operating companies are serial violators of the Nigerian Content Act.
“In many instances, international operators tend to comply with the Nigerian Content because it is in their DNA to obey laws or they have to show evidence of compliance to their home offices.
“On the contrary, some many indigenous companies feel entitled and assume they can get away with non-compliance. At other times they want to save costs to the detriment of the local economy.
“Some of the indigenous companies have also argued that they should be excluded from the implementation of the NOGICD Act since their primary investors are Nigerians.
“Some of the common violations by indigenous firms range from executing projects without obtaining prior approvals, non-execution of mandatory Human Capacity Development Initiative (HCDI), Non-utilization of vendors without approved Nigerian Content Equipment Certificate (NCEC) and utilization of the services of contractors that are not registered on the Nigerian Oil and Gas Industry Joint Qualification System Portal (NOGIC JQS) and several other violations.
“Other times, the firms fail to remit their one per cent mandatory Nigerian Oil Content Development Fund and engage expatriates without requisite approvals from the Board or even award contracts to foreign firms, even when other Nigerian companies can execute,” he said.
He said that it was surprising to see local companies undermine and flout the Nigerian Content Act despite being the immediate beneficiaries of the Nigerian content policy, thereby causing capital flight, loss of jobs, and opportunity for technological development.
Wabote, therefore, commended the indigenous companies that are gearing up to acquire the divested assets, adding that it is pertinent to remind all stakeholders of the industry that the provisions of the Nigerian content cover all entities and all activities connected to the Nigerian oil and gas industry.
He promised that the Board would continue to study the changing ownership dynamics in the industry, as well as to partner with the industry stakeholders to institute regulations that would ensure that the increasing footprints and stakes of indigenous production companies would not lead to a reduction in Nigerian content compliance and participation of Nigerians in the industry.
He, therefore, solicited the support of the media in the continued advocacy for Nigerian content compliance by all stakeholders in the industry.