Main Reason Shell, Chevron, Other Oil Companies Are leaving Nigeria

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Main Reason Shell, Chevron, Other Oil Companies Are leaving Nigeria

It has been revealed new information on why the oil majors are increasingly scaling down their operations and preparing their exit from the region.

According to an investigation , oil majors such as Royal Dutch Shell, ExxonMobil, Total, and Eni are cutting billions in spending after suffering profit losses, reinvesting in renewable fuels and concentrating only on the most cost-effective markets.

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According to The , the country was only able to attract $3 billion, or 4%, of the $70 billion committed on new projects in Africa between 2015 and 2019, which, according to development experts, does not bode well for an economy that relies on oil revenues to survive.

Other African countries such as Angola, Sao Tome and Principe, where some of the IOCs have made significant investments in recent years, have benefited from Nigeria’s loss.

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For example, oil companies from all over the world are now courting Sao Tome & Principe. Notably, a group of US companies, including Chevron Texaco and ExxonMobil, were among the first to obtain an oil licence, as was a Norwegian company, EER, which made over $70 million and has a lot of other opportunities.

Confirming this development, Delta State Commissioner for Environment, Hon. Onogba Christian, while fielding a question from our correspondent on the sidelines of the Institute of Directors Nigeria (IoD) Port Harcourt chapter’s “Stakeholders Forum on The Environment,” said oil majors such as Shell, Chevron, and others may have been compelled by the current socioeconomic realities that h

“The first ominous signs that presented themselves were the concerted attempts by the international oil companies (IOCs) to move their headquarters outside of the Niger Delta region,” he explained. It was a bad sign when that happened a few years ago.

“Of course, you can’t completely blame the IOCs because no businessman wants to invest in an environment where security is a major concern. He emphasised that the concern is really about third-party intervention, as well as bad legislation and other factors that can influence investment decisions.

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To solve the problem, he said that the must create an atmosphere that allows businesses to prosper. “I am confident that once there is a degree of certainty that their assets will be protected, many of these oil executives who have left the country will return,” Christain said.

“Nobody wants to do business in a chaotic environment,” said Chief Prof. Jasper Jumbo, Chairman/CEO, Niger Delta Projects Consortium Limited, echoing similar sentiments. No business will prosper in such a situation if peaceful coexistence is a challenge.”

International energy companies operating in Nigeria are concerned that provisions in the country’s long-delayed oil industry legislation would discourage new offshore ventures.

The OPTS urged lawmakers to scrap a planned hydrocarbon levy, arguing that producers will still be subject to corporate income tax.

“Our analysis of the Petroleum Industry Bill shows that deepwater provisions do not provide a favourable climate for potential investments and the launch of new projects,” Mike Sangster, managing director of Total SE’s Nigeria unit, told lawmakers recently in Abuja.

To encourage new investment, the proposed legislation should include complete royalty relief for downstream oil projects for the first five years of production or a phased royalty scheme, according to Sangster, who spoke on behalf of the Oil Producers Trade Section, which he chairs and includes Total, Royal Dutch Shell Plc, Exxon Mobil Corp., Chevron Corp., and Eni SpA.

The bill, which has been in the works for two decades, would simplify how Nigeria’s energy assets are managed and financed. Political wrangling and protests from foreign oil firms, who claim the government is seeking an unfair rise in revenues, have slowed progress on the bill since it was first introduced in parliament in 2008.

The failure to pass the bill has been a “major drag” on the oil and gas industry, according to Ahmad Lawan, the president of Nigeria’s Senate, who opened two days of public hearings on the proposed legislation last January. The delays have damaged the country’s ability to “attract both local and foreign resources” at a time when other resource-rich nations are competing more aggressively, he said.

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