Another gale of oil block divestment may hit Nigeria very soon, as Eni SpA, Italy’s largest oil company, is considering selling part or all of its onshore Nigerian operations as it seeks to divest peripheral businesses amid a drop in oil prices, people familiar with the matter say.
If this happens, analysts say it would boost local capacities of Nigeria in the upstream sector of the oil and gas industry.
Eni has asked advisers to look at options for the assets, which include interests in oil and natural-gas fields in the country, people familiar with the proceedings said, asking not to be identified as the information is private. Depending on what Eni decides to sell, the transaction may raise from $2 billion to $5 billion, the people said. It could also decide to keep the operations, they added.
A representative for the company declined to comment. Shares in Eni were trading at 15.94 euros ($17.50) .
Oil companies, including Royal Dutch Shell Plc and Chevron Corp., are selling fields, as they scale back Nigeria operations following unrest, violence and the theft of crude in the Niger Delta. The country’s daily output of about 2 million barrels of oil makes it Africa’s largest producer.
Eni Chief Executive Officer Claudio Descalzi has announced plans to sell assets worth 8 billion euros ($8.8 billion) in 2015-2018, including shares in subsidiaries Galp Energia SGPS and Snam SpA. Descalzi also proposed a 17 percent cut in investment over the same four years, compared to previous plans to adjust to lower prices.
Eni’s wholly owned subsidiary in the country, Nigerian Agip Oil Co., operates under a joint-venture agreement with Nigeria’s state oil company NNPC and ConocoPhillips. NAOC also operates two onshore exploration licenses.
The company said in July that 12 people died and three were injured in an explosion during repair work at its crude oil pipeline in Nigeria.
But some Nigerians said it is a welcome development because it would allow more local companies to participate in the upstream sector of the Oil and Gas industry.
Eddy Wikina , managing director of treasure Energy Resources and former officer of Shell Nigeria Exploration and Production Company, said since Eni wants to follow the footsteps of Shell, it would be a good thing, provided that the exercise is carried out transparently.
“There should be a level playing ground for everybody that should participate and they should avoid a situation in which only those close to highly placed government officials would be awarded the blocks”.
According to him, another group of local operators like the Seplat and Niconde of this world should be created. The oil blocks should not be given to those local companies that have already had enough in their hands.
Olusola Bello with Wire Service
