IOC scales down operations to global push for energy transition

By Felicia Nwosu

It is no longer news that major international oil companies, such as Shell, Chevron and others are gradually scaling down their operations in the bid to leave their host country, Nigeria in search for greener pastures in other countries.

Mele Kyari, NNPC’s Group Managing Director, who revealed this in Abuja at the Nigerian International Energy Summit 2022 with the theme, “Revitalising the Industry: Future Fuels and Energy Transition”, stated that it was due to global push for energy transition and net carbon zero target which has led to a massive investment drop in fossil fuel projects.

Although fresh insights have emerged, feelers emanating from some sources have revealed that most of the leading global oil brands in the country, which includes Royal Dutch Shell, ExxonMobil, Total and Eni, are cutting billions in spending after taking hits to their profits, thus shifting money to renewable fuels and focusing only on the most
cost-effective markets.

The revelation showed that the country was able to attract only $3 billion, or 4%, out of the $70 billion committed on new projects in Africa between 2015 and 2019, which indicated to be detrimental to a country which operates a mono-economy.

The source also stated that Nigeria’s loss has been the gains of other African countries such as Angola, Sao Tome and Principe, where some of the IOCs have made major investments in recent years, while adding that, in Sao Tome & Principe for instance, is now being heavily courted by oil companies from far and near. Notably, a consortium of US firms, including Chevron Texaco and ExxonMobil were among the first to secure oil license along with a Norwegian company, EER, which netted over $70million with many other prospects.

This came as a result of the Federal Government revelation that it had established a $50m Liquefied Petroleum Gas (cooking gas) Energy Fund in partnership with Afriexim Bank to deepen the use of LPG in Nigeria.

On energy transition, Kyari said the NNPC would work with its partners in facilitating the process in Nigeria regardless of the massive investment drop in fossil fuel projects amidst oil firms exits from Nigeria.

He said, “Companies are divesting. They are leaving our country literally, that’s the best way to put it. But they are not leaving because opportunities are not there.

“It is because companies are shifting their portfolios where they can add value, and not just that, where they can also add to the journey towards net carbon zero production. We understand this very perfectly. But we can’t afford not to realise that this country must benefit from the realities of today.”

Kyari said the NNPC would facilitate the process of energy transition in the country by working with its partners despite the drop in the investment in fossil fuel projects. He asserted that funding for fossil fuel projects had dropped by about 50 percent when compared to what it was about 10 years ago.

“No one has invested significantly in the last 10 years and more so in the last five years. And it is much more difficult in our country today because we are not able to invest in the fossil fuel industry in the last five years to the extent that we are seeing the effects of what that really means,” he said.

In a similar vein, OPEC’s Secretary-General, Sanusi Barkindo, and other African energy ministers in support of investments in fossil fuels, insisted that the global push for the energy transition to net carbon zero emission was not in favour of Africa.

They argued that Africa accounted for less than three per cent of global carbon emissions while some 600 million Africans had no access to electricity, stressing that it would be counter-productive to halt investments in fossil fuels in Africa.


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