There is optimism from industry analysts that the purchase of key assets offloaded by oil major Shell may turn around oil production in the troubled Niger Delta.
Although, Shell’s exit from Nigeria’s onshore oil sector highlights risks oil majors face in Nigeria but has raised hopes that local firms could reverse the output decline from the Niger Delta, industry officials and analysts said.
Shell which pioneered Nigeria’s oil industry is the most prominent Western company to exit the Delta, a region blighted by pollution, oil theft and pipeline vandalism.
Those issues have for year’s stymied investment and throttled production and government finances.
The company’s sale of its subsidiary to five mostly local firms fits an ongoing trend of Western energy companies divesting onshore Nigerian oil fields.
Exxon, Italy’s Eni, Norway’s Equinor and China’s Addax have struck deals to sell assets in the country in recent years.
“Nigeria has had well-established problems in policy in the oil sector, and the foreign exchange (forex) policy concerns have put constraints on investments. That’s probably partially why you have seen the majors pulling out, and disinvesting to some extent,” said Andrew Matheny, senior economist with Goldman Sachs.
