Report: Divestment from the Delta Implications for the Niger Delta as international oil companies exit onshore production

This report explores the trends, drivers, and implications of international oil companies (IOCs) selling off assets to Nigerian domestic oil companies (DOCs).

Our analysis of investment trends illustrates that divestments have been ongoing for decades, but the rate is rapidly accelerating. For the first time since production began sixty years ago, the DOCs are about to surpass IOCs in the proportion of oil blocks where they are operators and own equity.

The changing context is driving divestments, particularly the rising costs of operations, increasing likelihood of legal action for environmental pollution, and intensifying international pressure to cut emissions and decarbonise the economy. Yet these factors are arguably caused, or at least exacerbated, by the operations of IOCs.

The transition therefore raises several questions about the responsibility to address the toxic legacies, and the implications for communities in the Niger Delta, and Nigeria writ large. This includes whether DOCs can improve on the performance of the IOCs, or if new dynamics could emerge, exacerbating the impacts on citizens, the environment, and the economy.

Given the significant impact of this changing dynamic, we are calling for a comprehensive and urgent discussion on what needs to be done to ensure that historic injustices experienced by communities are addressed, that an exit from operations is done responsibly including proper provisions for clean-up and decommissioning, and that whatever comes next does not result in a worsened situation for host communities.

Key messages:

• IOCs are selling onshore assets in the Niger Delta at an accelerated rate, and leaving without adequately addressing the legacies of environmental pollution, social strife, and governance problems created by their operations over the past 60 years.

• DOCs are taking over, with less experience and resources. There are already signs that the environmental, social and governance (ESG) performance could be worse, so the problems that communities face will continue, and they will have fewer options to seek accountability and justice in international courts.

• The Federal Government of Nigeria is facilitating the divestments, and doubling down on oil and gas, when in reality, there is an urgent need to design strategies to manage the industry’s decline, and take actions to protect communities in the Niger Delta, and hold IOCs accountable for their historic liabilities.