Foreign investors withdraw from Nigerian oil sector. Recent research from an international firm responsible for business research and analysis, EIU, noted that there would need to be more investing power for the indigenous oil companies acquiring the assets of the divesting international oil companies to halt foreign investors from withdrawing.
Multinational companies have heavily invested in the Nigerian oil industry. However, the multinational companies have been divesting, and the indigenous companies are now buying the assets. However, the EIU, in its report in Nigeria, notes that indigenous companies have low investing power, unlike multinational companies.
Moreover, there’s an observation of more withdrawals in direct foreign investment this year (2024), which also occurred in 2023.
The gradual reduction in naira value led to a decrease in investments from multinational companies at an increasing rate in the year 2023, which is observed to continue in the present year. According to a recent statement from Shell, the Shell Petroleum Development Company of Nigeria Limited, a Nigerian onshore company, was sold to Renaissance, a group of five businesses that includes four exploration and production firms.
However, the Minister of State Petroleum (Oil) is optimistic about international companies divesting into Nigeria’s oil sector. He noted the situation would allow for the development of capacity for the indigenous companies.
Moreover, the genuineness of the foreign oil investors is being questioned by the Governor of Imo State. He also backed the Minister of State Petroleum (Oil) ‘s optimism about divesting foreign companies as an opportunity for indigenous firms.
The study states, “Oil majors involved in the exodus are selling their expensive and insecure onshore assets, eventually leading to the sector’s indigenization.”While this is good for foreign exchange accumulation, local businesses won’t be able to match the existing multinationals’ investment power.
With the caveat that “this remains about 250,000bpd below the 2019 level,” the worldwide research organization projected that the nation’s crude oil production will increase from 1.23 million barrels per day in 2023 to 1.48 million barrels per day in 2028.
