Nigeria’s Seplat moves in to fill gap as foreign oil companies retreat

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The Nigerian company that took over the local operation of ExxonMobil wants to double production within six months, after moving in to take advantage of the retreat of foreign majors from the county’s onshore oil sector.

London-listed Seplat completed its purchase of a range of oil and gas assets the US energy giant owned in December after Nigerian regulators delayed signing off on the deal for more than two years.

Seplat senior management said the plan was to more than double output from about 50,000 barrels a day to roughly 120,000 bpd over the six-month period.

“The assets have had very minimal investments until now,” Seplat’s chief financial officer Eleanor Adaralegbe told the Financial Times in an interview. “We expect that once we come in there will be an opportunity to grow that much further.”

The $1.28bn acquisition of Mobil Producing Nigeria Unlimited makes Seplat one of the biggest domestic producers with an asset base of 11 onshore oil blocks, 48 oil and gas fields, three export terminals and five gas processing facilities.

The combined assets mean Seplat controls 16 per cent of Nigeria’s present production capacity, said chief executive Roger Brown.

Seplat will run the assets in conjunction with state-owned Nigerian National Petroleum Company as legally mandated in the country’s oil and gas industry.

Brown said his company was confident it could work with NNPC to raise overall production, a stated goal of Nigeria’s President Bola Tinubu. NNPC has been criticised for decades of alleged corruption and mismanagement and last year admitted it owed its suppliers money, estimated to be more than $6bn.

“We have no concerns working with NNPC . . . There’s been a massive change with President Tinubu, realising that production is a great way of getting dollars into the country and supporting the currency,” Brown said.

Many of the Nigerian assets require time and investment so they can produce again after being left idle. “We have over 600 wells drilled and barely 200 of them are producing,” said chief operating officer Samson Ezugworie. “We have significant idle wells that need to be rejuvenated and brought back into production within a short period of time.”

Exxon’s sale comes as international oil groups exit Nigeria’s troubled onshore and shallow water sector, which has been beset by decades of environmental damages, and more recently by declining production. International groups such as Italy’s Eni, Norway’s Equinor and Addax Petroleum have all departed.

Shell, which is synonymous with Nigeria’s oil industry and drilled the country’s first successful well in 1956, has sold its onshore business to local consortium Renaissance for $1.3bn. Prospects of better returns with fewer environmental concerns have attracted foreign oil companies to offshore oilfields.

Seplat is among a growing cohort of local Nigerian oil groups stepping into the gap. Nigerian companies have long sought to increase their production capacity and are betting their knowledge of the local country would serve them well as they seek to engage with local communities, who have often been at loggerheads with international groups over environmental damage.

Critics say local groups are purchasing unwanted assets with little life left in them, although Seplat rejects this assertion. Ezugworie said the company believed its new assets had “significant scope and opportunity” to produce and that there were abundant reserves left to tap.