Oil Bloc: Mass Sack Looms As More IOCs Mull Exit

….Total appoints bank to manage $750m asset sale

…..Oil industry job loss hits 3,500

By Adeola Yusuf
Mass sack is currently looming in Nigeria’s oil industry as more international oil companies consider pulling out from Nigeria’s oil bloc stakes.
The move, which came a few days after President Muhammadu Buhari assented to the bill that amends the Deep Offshore (and Inland Basin Production Sharing Contract) Act, New Telegraph gathered exclusively yesterday, is to worsen the over 3,500 job loss suffered by Nigeria’s oil industry between 2016 and 2019.
French super major, Total, which pioneered the fresh exit plan from Oil Mining Lease (OML) 118, this newspaper gathered, has appointed an investment bank, Rothschild, to manage its $750 million asset sale in Nigeria.
Total is not the only international oil company that has stakes in OML 118.
The stake owners include Royal Dutch Shell – the operator – Exxon Mobil and Eni.
While Royal Dutch Shell owns 55 per cent stake in OML 118, Exxon Mobil has 20 per cent, Eni and Total both own 12 per cent in the oil bloc.
There has been exchange of correspondences between the IOCs offices in Nigeria and their headquarters situated in their mother countries over this move, this newspaper can report authoritatively.
“While a lot of these correspondences centred on implications of the new law guiding Production Sharing Contracts (PSCs) to “our bottom lines, our officers here in Nigeria have been tasked to take resolutions on the new bill as an emergency,” a top management staff of one of the oil majors told this newspaper.
Stating that there would be need for re-adjustment in revenue forecast and projections made on investments in Nigeria before the bill, he maintained that there would be “realignment in spending and possible right-sizing to reflect the new reality.”
There has been mass sack of over 3,500 workers in Nigeria’s oil industry between 2016 and 2019, data compiled by this newspaper showed.
While the country’s economic recession was responsible for the sack of about 3,000 in 2016, the United States super oil major, Chevron, sacked 500 staff working on various projects of the company in Nigeria in 2019.
The two major unions in the oil and gas sector, Nigeria Union of Petroleum and Natural Gas (NUPENG) and Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), then threatened to go on strike, saying over 3,000 of their members were affected during the 2016 mass sack.
Total Group is already looking for buyers for one of its major oil blocs in Nigeria.
The oil company wants to sell off its 12.5 per cent stake and has already contracted an investment bank to manage the sale process of the deepwater oilfield.
Total’s 12.5 per cent stake in the deepwater oilfield, Oil Mining Lease 118, is estimated to be worth $750 million. Part of the oil bloc includes Bonga field, which began production in 2005.
According to report, the Bonga field has produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak.
With the $10 billion development of the Bonga Southwest field, production output is expected to grow.
The decision to sell its stake in the OML 118, which is located some 120 kilometres (75 miles) off Niger Delta, is coming amidst Total’s expansion in Africa.
The company is also reportedly planning to sell $5 billion of assets around the world by 2020; the sale of its stake in OML 118 is part of the assets’ sale.
Shell Nigeria Exploration and Production Company (SNEPCo), it would be recalled, invited interested bidders for the development of the Bonga South West Aparo (BSWA) oil field in February 2019.
It was reported that the project’s initial phase includes a new Floating, Production, Storage and Offloading (FPSO) vessel, more than 20 deep-water wells and related subsea infrastructure.
The field lies across Oil Mining Leases 118, 132 and 140, about 15km southwest of the existing Bonga Main FPSO.
But Shell disclosed days after that the directive by the Nigerian government to foreign oil companies to pay $20 billion in taxes owed would delay the final investment decision on its Bonga Southwest deepwater oilfield.