logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


Why Are Oil Companies Suddenly Divesting from Nigeria?

  +Follow June 19, 2013 3:42PM
Share:
Tickers Mentioned:

Chevron (CVX) announced Tuesday it was going to start getting out of Nigerian oil. The oil company is expected to sell all or part of its five shallow water oil blocks, aiming to pass them off to local Nigerian oil companies. The Nigerian government has been seeking to take a more vested interest in oil companies setting up shop in their country for some time now, and Chevron oil investors speculate that if Chevron didn’t sell now, they’d eventually get nothing for the oil blocks.

Chevron isn’t alone in divesting from Nigeria. Royal Dutch Shell (RDS), Conoco Phillips (COP), Italian company Eni (E) and French company Total SA (TOT) have all within the last few years sold holdings to local Nigerian companies. The question is: why now? Why are the big oil companies suddenly fleeing one of the most oil-rich countries in Africa en masse?

A look at each American-trading oil company – and their history drilling oil in Nigeria – shed light on some of the answers.

CHEVRON (CVX): Political unrest directed at Chevron has been building in Nigeria (and with US-based Nigerians) for some time. In October 2008, former Nigerian citizens injured by Nigerian military personnel filed a lawsuit against Chevron, alleging the company had backed military operations to ensure the safety of the company’s Nigerian holdings and disrupt local protests against their oil rigs. Thought Chevron was exonerated, relations continued to worsen.
Last week, People of the oil-rich Ondo state petitioned the government to intervene after feeling Chevron Nigeria had ignored implementing a document called the General Memorandum of Understand (GMU), meant to strengthen relations between locals and Chevron and provide “scholarships” for host communities. After feeling ignored by Chevron, the Ondo gave Chevron seven days to implement their demands and stated that “at the expiration of the said ultimatum, no one would be able to guarantee the safety of CNL (Chevron Nigeria Limited)’s offshore facilities.” 
In other words: why did Chevron sell? Because otherwise, the facilities could be taken by force.  

ROYAL DUTCH SHELL (RDS): Royal Shell has been in business in Nigeria since 1937. In the 1990s tensions arose between the local Ogoni people and Shell. The Ogoni maintained that they were not being fairly compensated by Shell, and began organizing protests. The high-profile arrest and execution of activist Ken Saro-Wiwa by the Nigerian government damaged the company’s image even further. Regardless of Shell’s disputed direct level of involvement with the case, the incident turned Nigerian sentiment against the company (Shell eventually settled out of court.)

Since the 90s Shell has been slowly divesting their Nigerian interests. In November 2011 they sold a large chunk of two blocks to the Nigerian National Petroleum Corporation. And in February 2012 Shell reported 7.5 billion in total divestment from Nigeria, though they still control 21 percent of Nigeria’s total oil and gas production.

CONOCO PHILLIPS (COP): Conoco Phillips is near closing a deal to sell the entirety of its Nigerian operations to Oando Energy, for about $1.79 billion. While people questioned whether Oando would have the funds to complete the transaction, Oando is claiming that the deal is good to go, and Conoco Phillips will soon be out of the country. Like with Chevron (but in less direct terms) there has been pressure put on by the government to have an indigenous company control more oil production, and concerns that thefts by local gangs could continue if they didn’t sell. Tough Conoco Phillips is by no means the only victim of theft UN estimates put the amount of crude siphoned off from pipelines at around 7.5 percent of the country’s total production, or about 150,000 barrels of crude a day.

EXXON MOBIL (XOM): Unlike the other major oil companies, ExxonMobil’s presence in Nigeria may actually be increasing. Exxon said in May they plan to invest over $33 billion in Nigerian oil and gas sector over the next five years. What makes Exxon’s presence in Nigeria unique is the fact that all 90 of their oil-producing platforms are offshore. Also, Exxon has managed to largely avoid some of the human rights controversies and political pressure to turn over production to local companies that have dogged other oil companies in Nigeria.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Signup for our daily newsletter and get our best articles emailed right to you!

Results for xom
King of investments
31 Aug 15 19:58:51
Pipeline worry sparks Alaska plea for Obama to open oil spigots http://t.co/u8NvmntUPF $BP, $COP, $XOM
AFajitas
31 Aug 15 19:57:01
Swinging #oil for the fences. $UWTI $USO $XOM $VLO $EXO http://t.co/Dp3FJLsvF5
Timothy Reazor
31 Aug 15 19:54:11
You have all the $XOM you can eat until the 3rd wk of October - I want it at $70 then :) https://t.co/f8Y0hPVGwX
Stewart McGehee
31 Aug 15 19:49:34
@TheRudinGroup @SEIAdvisors talk to old friend still in $WMT $XOM etc. Really unhappy! Must invest in the new economy!
King of investments
31 Aug 15 19:42:30
My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/Zrs0tDehwc $BXLT, $ARIA, $SHPG, $XOM, $CVX
Russell Barbour
31 Aug 15 19:40:50
http://t.co/UaXJBqoX5l <-- Here is my review of Super Alerts on @profitly stock picking service $GASL $OAS $XOM $IDTI
FinBuzz
31 Aug 15 19:39:31
Highest scoring stories for #SP500 under one watchlist $AAPL $WFC $XOM http://t.co/Rwpf6Sogpu> http://t.co/0utgUgmFp8
Financial Metrics
31 Aug 15 19:33:17
$XOM has bounced back 10% in the last week with crude jumping up too. A safe dividend stock we like, hoping it continues its recovery
#HelpYouGetGAINS
31 Aug 15 19:31:37
My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/EaGXdYuW8D … $BXLT $ARIA $SHPG $XOM $CVX
MinaWon
31 Aug 15 19:28:30
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
pinestreetjournal
31 Aug 15 19:23:38
RT @SeekingAlpha: My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/RGcnHDLem2 $BXLT $ARIA …
Jason Olive
31 Aug 15 19:08:21
RT @SeekingAlpha: My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/RGcnHDLem2 $BXLT $ARIA …
Chris Reynolds
31 Aug 15 19:07:23
RT @SeekingAlpha: My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/RGcnHDLem2 $BXLT $ARIA …
FinBuzz
31 Aug 15 18:59:38
Do you know everything while trading in $DJIA $CAT $XOM $GS http://t.co/XzfPMrRVHT http://t.co/itQk7ufEyT
Seeking Alpha
31 Aug 15 18:59:15
My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/4BnqN6zcBg $BXLT $ARIA $SHPG $XOM $CVX
Income Investing SA
31 Aug 15 18:59:15
My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/T2N1auWRpA $BXLT $ARIA $SHPG $XOM $CVX
Quantpost $XOM
31 Aug 15 18:59:15
$XOM News: "My 4% Dividend Yield Portfolio: Exchanging Baxter International For…" http://t.co/Qc5SOpXJJw Analyze: https://t.co/u9RVbNaBcv
Quantpost Basic Mats
31 Aug 15 18:59:15
$XOM $CVX News: "My 4% Dividend Yield Portfolio: Exchanging Baxter International…" http://t.co/Bl8YIwe5Ph Analyze: https://t.co/RwRzkJdRQd
Seeking Alpha
31 Aug 15 18:59:14
My 4% Dividend Yield Portfolio: Exchanging Baxter International For Johnson & Johnson http://t.co/RGcnHDLem2 $BXLT $ARIA $SHPG $XOM $CVX
Stock Market Picks
31 Aug 15 18:39:27
$PG $T $TRV $UNH $UTX $VZ $V $WMT $XOM Long and short positions from the $DJIA, up to 1800% since 2008. http://t.co/sjQjlxfmsp $DIA
Faisal Bhatti
31 Aug 15 18:25:58
Crude oil caps 27% three-day rally; energy st... $XLE $OIH $CVX $XOM $COP $PSX $SLB $RIG $HAL $WLL $MRO $NFX http://t.co/eG527sSBU9
Frank Vogel
31 Aug 15 17:41:20
Crude oil caps 27% three-day rally; energy stocks reverse off early lows $CVX $XOM http://t.co/uvIOrPkmj3
Brian B.
31 Aug 15 17:39:55
Has OPEC Finally Had It With Low Oil Prices? http://t.co/u6rItH3Car #IBDNews via @IBDinvestors $CLR $LPI $CRZO $XOM $CVX
AJ
31 Aug 15 17:37:46
@BrianSozzi I say we meet in D.C. Dec. Dow at 14K & bring rope. #NFL #MLB #PGA $CSX $XOM $TSLA $AAPL Jan. on Wall St. @OccupyWallStNYC
Stock Wire
31 Aug 15 16:46:35
Exxon Mobil Corp. (XOM) Closes 0.23% Up on the Day for August 31 $XOM http://t.co/lwdPe72szh
ProVesting
31 Aug 15 16:03:02
$KO $XOM $JNJ: CF Industries – A Long-Term Play For DGI’ers, Growth And Value …: http://t.co/0yUBlZrskB
Bad * Charts
31 Aug 15 16:00:40
First target at 67 hit. Check July 1 post & chart update. http://t.co/bccb9gOCWJ $XOM http://t.co/j9aif3LzNn
MICHAEL FILLOON
31 Aug 15 15:57:19
Pipeline worry sparks Alaska plea for Obama to open oil spigots http://t.co/dWhNHEawrZ $BP, $COP, $XOM http://t.co/wQxRXd7fof #oil #energy
Brenda MacD
31 Aug 15 15:57:17
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
John Mathew
31 Aug 15 15:50:31
Crude oil caps 27% three-day rally; energy st... $XLE $OIH $CVX $XOM $COP $PSX $SLB $RIG $HAL $WLL $MRO $NFX #Oil http://t.co/7wkNuvQRmh
Quantpost Basic Mats
31 Aug 15 15:50:07
$BP $COP $XOM News: "Pipeline worry sparks Alaska plea for Obama to open oil…" http://t.co/onM8Yq2YKB Analyze: https://t.co/BJfIgwHv8O
Quantpost $XOM
31 Aug 15 15:50:07
$XOM News: "Pipeline worry sparks Alaska plea for Obama to open oil spigots $BP …" http://t.co/pZVxena8uf Analyze: https://t.co/yxcwstv3i8
Seeking Alpha
31 Aug 15 15:50:06
Pipeline worry sparks Alaska plea for Obama to open oil spigots http://t.co/3Mj95HRIT2 $BP $COP $XOM
Energy Stocks SA
31 Aug 15 15:50:06
Pipeline worry sparks Alaska plea for Obama to open oil spigots http://t.co/V3coCCKKzI $BP $COP $XOM
Breaking News
31 Aug 15 15:50:05
Pipeline worry sparks Alaska plea for Obama to open oil spigots http://t.co/DgfycPS3rB $BP $COP $XOM
4xStacks
31 Aug 15 15:47:49
RT @tradingproverbs: Today’s most active Options $AAPL $FB $BAC $TWTR $BABA $NFLX $XOM $INTC $TSLA $MU $AA $YHOO http://t.co/WjZd6MEqEL ht…
StockExpert
31 Aug 15 15:10:04
Not so fast. Oil may test $30 again: Trader $UWTI $DWTI $OIL $USO $XOM $SDRL $WNR $SDRL $RIG http://t.co/fSTXCPG7ns
Michael Sanzo
31 Aug 15 15:02:17
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
FinancePress
31 Aug 15 14:37:26
$XOM Exxon Mobil Corp. (XOM) Closes 0.23% Up on the Day for August 31: Exxon Mobil Corp. (XOM) Closes 0.23% U... http://t.co/K3zlTJVjGL
Tony Gulla
31 Aug 15 14:24:00
Current wish list levels, and potential allocations: 50% $xom @ 55-60, 10% $memp @ 5-5.50, 20% $baba @ 50-55, and 20% $fcx @ 8 - 9
Crystal
31 Aug 15 13:54:02
My US holdings: $CL $GIS $HSY $JNJ $PEP $PG $SBUX $XOM
ProVesting
31 Aug 15 13:42:02
$XOM: Brazil And Mexico Vie for Cash From Oil Explorers in Price Rout: http://t.co/skWRv4IAM0
Nicola Cascione
31 Aug 15 13:41:44
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
12Stocks.com
31 Aug 15 13:40:37
Dow #Stocks Trend $HD $NKE $V $INTC $CAT $AAPL $CVX $AXP $UNH $VZ $XOM $DD $GS $KO $BA $MCD $UTX $JPM $DIS $MSFT @ http://t.co/TvzJfd0RGT
Tunaman4u2
31 Aug 15 13:33:05
Oil up 7.5%, $XOM up 0.23%. Odd day in oil land
stockschamp
31 Aug 15 13:31:28
Gains Over 2500% In one Trade.. Subscribe Here! http://t.co/8WvnrVmkBS .. $XOM $XON $XOXO
MRPL
31 Aug 15 13:29:51
RT @racernic: epic bounce in oil. So if $XOM 65 was too low, i don't chase b4 I c it tackle (Yelo circle) w/2diff potential outcmes http://…
Lydia Idem Finkley
31 Aug 15 13:28:38
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
Ernest Scheyder
31 Aug 15 13:24:04
North Dakota oil well owned by XTO Energy had a blowout over the weekend and lost 550 barrels (23,100 gallons) of crude. $XOM
funder
31 Aug 15 13:23:42
RT @allstarcharts: NEW POST: Here’s Why Energy Will Outperform Going Forward http://t.co/ZdGMPsvgNY $XLE $XOP $OIH $XOM $CVX $HAL $SLB http…
				
				
  +Follow June 19, 2013 3:42PM
Share:

Comments

 

blog comments powered by Disqus

 Today's Must Reads

Welcome to Equities.com's Small-Cap Throwdown


These Analysts Called Apple's (AAPL) Collapse, Here's What They're Saying Now

7 Dow Stocks Worth Owning and a Lot that Aren't

Sprint Turnaround Has Begun


Saving the

Small-Cap Market

 

Small-cap stocks offer investors many benefits, ranging from higher growth potential to overlooked value opportuni... in Equities.com's Hangs on LockerDome

About us

Equities.com is an advanced financial data portal and social network designed to connect self-directed investors with the world’s most innovative startup and small cap companies. Through our in-depth coverage of small cap markets, comprehensive research and stock valuation reports, state of the art issuer products, and world class events, Equities.com provides the social tools and insight that drive tomorrow’s investment relationships and opportunities.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register

LOG IN