Why Equinor is selling its Nigerian offshore oilfield

The Norwegian energy firm, Equinor, has indicated an interest in selling off its stake in the offshore Agbami oilfield.

Reuter reported that the company has launched the sale of its stake in the offshore asset, joining ExxonMobil, Shell and TotalEnergies who have sought to sell off assets in Nigeria.

According to Reuters, Equinor has hired investment bank Standard Chartered to run the sale process, which could raise $1 billion.

More insights: Equinor said it has invested over $3.5 billion in its 20.21% stake in the Agbami oil field. Meanwhile, Chevron is the operator with 67.30% interest and Prime 127 holds the remaining 12.49%. Equinor has drilled 10 wells with a 40% discovery rate.

Equinor launched the sale process after signing a deal in 2022 with the Nigerian National Petroleum Company (NNPC) Limited, to extend by two decades the license for offshore block OML 128, which is part of the Agbami field.

Equinor also holds a 53.85% stake in exploration license OML 129.

Why this is happening: Sources revealed that production in the field has been declining rapidly in recent years, down from 36,000 barrels of oil equivalent per day (boepd) in 2019 and 29,000 boepd in 2020. Also, Equinor’s exit is part of the company’s efforts to focus on newer and more profitable assets. Other oil majors that have assets in Nigeria have also faced challenges like crude oil theft and oil spills.

Legacy oil producers vs new producers: In its October 2022 State of African Energy report, the African Energy Chamber (AEC) stated that Libya, Chad and Egypt are expected to become the biggest crude oil production gainers from 2022 to 2030, while Nigeria, Ghana, Algeria and South Sudan see a reduction in operations.

The AEC report also noted that Nigeria has been aspiring to reach 2 million barrels per day for some years. But this has remained a dream due to some factors, including the international oil companies (IOCs) exit from oil explorations. The report noted that their exit will drastically reduce the capital expenditure (CAPEX) needed to boost Nigeria’s oil output.

For the record: US major, ExxonMobil had earlier announced that it was exiting its shelf water depth portfolio in Nigeria to reduce its high emissions oil and gas portfolio and transition to cleaner energy sources.

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