PENGASSAN: Some local oil companies can’t fund assets acquired from IOCs

The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) says indigenous oil companies do not have the financial strength to fund the assets they acquired from international oil companies (IOCs).

Festus Osifo, president of the association, spoke during a press conference in Lagos on Tuesday.

Osifo said there are practical cases of local companies that bought some assets from IOCs but the assets depleted because “they can not manage them very well”.

“These companies are practical cases of local companies that bought over some of the fields hitherto managed by the IOCs. But they could not operate because all they were doing was extracting oil from wells till it got dry,” Osifo said.

He said the oil and gas business is not cheap, and is a petrodollar business, which is highly capital-intensive.

“TotalEnergies built one field alone with $16 billion. How many banks in Nigeria would be able to fund a project of that magnitude? If you join all the banks’ capital bases together, I am not sure they can fund a $16 billion project. That shows you how capital-intensive the projects are,” Osifo said.

Speaking further, he said most IOCs have strong technical and financial partners all over the world, giving them easy access to funds.

“An ExxonMobil can come and bring a business of $20 billion and put it in Nigeria, and they will get partners because ExxonMobil is listed on the New York Stock Exchange, the London Stock Exchange, and all great exchanges in the world,” he said.

“They can easily attract funding because, over the years, they have developed that partnership. They have developed their creditworthiness, but it will be difficult for a local company to go to Bank of America or go to Bank of China to attract funding.”

According to Osifo, the union supports the Nigerian Upstream Petroleum Regulatory Commission’s (NUPRC) efforts in running a check on prospective investors.

He said part of what the NUPRC is doing that “made us adopt their six cardinal frameworks” is that before they “allow you to come into the field, they will check if your finances are able to develop this field”.

Osifo stressed that the union wanted the companies to do well to employ more workers instead of retrenching.