DIVESTMENT POLICIES BY MULTINATIONALS ON THE GROWTH OF THE OIL AND GAS INDUSTRY IN NIGERIA AND NORWAY

Abstract

The Nigeria’s Oil and Gas Industry appears to have set the stage for the entrance of new local and international operators into the sector. International Oil Companies have been divesting from onshore Niger Delta oil operations for over a decade, selling their interests in oil mining leases (OMLs) and associated infrastructure to domestic oil companies. The enactment of the Petroleum Industry Act is hoped to stimulate entry into the upstream sector by mandating competitive bidding as opposed to discretionary awards, the award of upstream assets and the introduction of more favourable fiscal conditions. This paper aims to discuss the effect of divestment policies on the growth of the Oil and Gas Industry in Nigeria and Norway. Adopting the doctrinal research methodology, the paper reveals that several challenges such as poor implementation of extant laws, militate against successful and effective divestment programs in Nigeria and its impact on the growth of the Nigerian oil and gas industry. Prioritization of local content thresholds into oil and gas operations, increased domestic gas supply and a healthy operator and host communities’ relationship are some of the effects of divestment policies. It is recommended that although the enactment of the PIA has established a comprehensive regulatory framework for divestments, robust monitoring and enforcement of key regulations, especially environmental regulations are crucial for both divesting IOCs and acquiring indigenous companies. Strengthening the capacity of NUPRC and NMDPRA to effectively oversee divestment transactions and the operations of indigenous companies is essential for transparent, effective and speedy divestments.