Chevron and ExxonMobil Exclude Nigeria from 2024 Budget Plans
American oil giants Chevron and ExxonMobil have recently disclosed their spending plans for 2024, and to the dismay of many, Nigeria has been omitted from the equation. This exclusion has cast a shadow of uncertainty over several major projects in the country.
After weathering a crisis in 2020, the two oil multinationals have rebounded with substantial cash inflows in 2021, resulting in plans to ramp up capital spending next year. While they prioritise capital discipline and higher returns for shareholders, the absence of Nigeria from their forthcoming expenditure outlook for 2024 has been unexpectedly conspicuous. Instead, attention has been directed towards countries such as Libya, Ivory Coast, Kazakhstan, Guyana, Brazil, and Singapore.
The Nsiko offshore deepwater project, with a production capacity of 100,000 barrels per day, seems to have been overlooked by Chevron, even with the company’s intentions to allocate between $18.5 billion and $19.5 billion towards new oil and gas projects next year – an 11% increase from the current year. Similarly, ExxonMobil has made no mention of Nigeria’s 80,000 barrels per day Bosi oil field, discovered in 2006, and the 110,000 barrels per day Uge deepwater project in their 2024 funding plan.
The capital expenditure plans of Chevron and ExxonMobil underscore the industry’s gradual recovery following pandemic-induced setbacks, recent acquisitions, and efforts towards carbon reduction. Exxon, in particular, aims to spend between $22 billion to $27 billion annually through 2027. Despite the increased spending, their combined amounts are significantly lower than the staggering $84 billion spent by the companies in 2013, when oil prices were frequently trading above $100 per barrel.
Chevron’s 2024 budget includes around $15.5 billion to $16.5 billion in organic capital expenditure for consolidated subsidiaries and an additional $3 billion for affiliates. One significant mention is Tengizchevroil’s project in Kazakhstan, which accounts for approximately half of the affiliate spending. This financial outlook does not include any potential impact from Chevron’s proposed acquisition of rival, Hess Corp, a deal which is expected to push capital spending to between $19 billion and $22 billion.
Amidst these financial discussions, Nigeria appears to be struggling to attract the significant investment required for the development of its oil and gas resources. The country is currently grappling with a myriad of challenges, including insecurity, oil theft, and inadequate infrastructure. These issues have contributed to the difficulty in securing investments from major international oil companies. In fact, several of these companies have recently divested from their Nigerian assets, signalling a visible shift in their focus.
Equinor, Eni, Addax Petroleum Development Plc, and ExxonMobil are among the multinational companies that have either sold off or expressed their intention to reduce their involvement in Nigeria’s oil production assets. However, energy analysts foresee this trend as an opportunity for indigenous Nigerian companies to gain a larger market share by acquiring these divested assets.
The absence of Nigeria from the 2024 spending plans of Chevron and ExxonMobil is undoubtedly cause for concern. As the global energy landscape evolves, it is imperative for Nigeria to address the challenges that are hindering the inflow of investments while also exploring ways to leverage opportunities for growth in the ever-changing oil and gas sector.
