“Climate and Security Concerns Lead Big Oil to Pull Out of Nigeria”

The departure of prominent oil and gas corporations from the Niger Delta has reached unprecedented levels. Despite the recent relaxation of exploration regulations in Nigeria through the Petroleum Industry Act (PIA) 2021, several major industry players have made the decision to exit the Nigerian market this year.

Most notably, in November, Norwegian oil and gas titan Equinor ASA divested its Equinor Nigeria Energy Company (ENEC) to local firm Chappal Energy, ending a thirty-year partnership with Africa’s largest oil producer. Similarly, in September, Italian energy company Eni S.p.A. revealed plans to sell its onshore operations to local entity Oando, and in February, U.S. supermajor Exxon Mobil Corp announced its intentions to sell its equity interest in Mobil Producing Nigeria Unlimited to Seplat Energy Plc. for roughly USD1.3 billion.

However, the most significant departure has been that of Anglo-Dutch supermajor Shell Plc, which has been selling off numerous stakes in onshore oil fields in the Niger Delta since 2010. Shell’s annual reports indicate that it has already divested 50% of its Nigerian oil assets and confirmed in April 2022 that it was divesting its interest in several onshore and shallow water fields.

The primary reasons cited for the departure of these multinational oil companies have been concerns around security and climate. Executives from these companies have expressed apprehension regarding security challenges in the Niger Delta, with Shell’s Chief Executive Officer Ben van Beurden stating that the exposure “doesn’t fit with our risk appetite anymore.” TotalEnergies’ CEO Patrick Pouyanne also mentioned the “disruption of local communities” as a source of great concern, while ExxonMobil’s President Liam Mallon emphasized the need to prioritize competitively advantaged investments and support the Nigerian government’s efforts to grow its oil and gas operations.

While insecurity and prioritizing other assets have been cited as the primary reasons for the departure, the climate angle could be just as crucial. As the world continues to address climate change, these major companies have been divesting from polluting assets globally. Shell, for instance, has specifically mentioned in annual reports that the divestments in Nigeria and elsewhere play a role in decreasing the company’s greenhouse gas emissions.

However, there are dissenting voices. A report titled “Dirty Exit” by We the People suggests that the divestments are an attempt to escape justice after years of significant pollution in the Niger Delta. The report alleges a surge in lawsuits in Nigeria and the home countries of oil companies, demanding accountability for abuses.

Furthermore, the Washington Post has reported that communities left behind after these oil giants sell their Niger Delta assets have experienced worsening conditions, with local companies doing an even more substandard job on emissions control.

In conclusion, the ongoing departure of major oil companies from Nigeria due to climate and security concerns is a momentous development with far-reaching implications for the country’s energy sector. The reasons cited for the exits reveal a blend of corporate strategies and global trends in the oil and gas industry. Time will elucidate the impact of this exodus on both the involved companies and the Nigerian oil market.