Shell setback upsets Nigeria's quest to lure investment
Exxon Mobil decision was approved but after long wait
Shell has not commented and regulator has not explained
Some investors see positive change
By MacDonald Dzirutwe
LAGOS, Oct 23 (Reuters) -Nigeria's decision this week to block Shell's SHEL.L $2.4 billion sale of its onshore assets has sent a negative signal to investors the country urgently needs to strengthen its all-important oil sector, analysts said.
President Bola Tinubu has been seeking with some success to woo foreign investment as Africa's most populous country grapples with a fiscal crisis.
But this week the upstream regulator surprised many in the industry by declining to approve Shell's $2.4 billion deal with the Renaissance consortium, dominated by local firms.
It did not give reasons for its decision and Shell has yet to comment. The company has ties that stretch back more than half a century and is one of the biggest investors in Nigeria's oil, which is the backbone of its economy and biggest foreign currency earner.
A similar deal by Exxon Mobil to sell onshore assets to Seplat Energy was approved this week, but only after a wait of more than two and half years.
Clementine Wallop, director for sub-Saharan Africa at political risk consultancy Horizon Engage said the difficulty of getting regulatory approval clashed with the president's quest to win outside investment.
"On the one hand, you have a government that says we're open for business. We want to improve the ease of doing business. We want to engage with the world's largest energy investors, and on the other hand, there have been these long delays to the approvals," Wallop said.
"The delays have been an impediment to the success of the Tinubu regime's big investment push. It has had an effect outside the energy industry as well."
DOWNWARD TREND
As Nigeria's economy has failed to recover from the shock of the pandemic and its impact on oil demand, total foreign investment inflows fell to $3.9 billion last year from $5.3 billion in 2022, data from the National Bureau of Statistics showed. That continued a downward trend that started five years ago when investors pumped in $24 billion.
The oil assets Shell is selling are either producing below capacity or not producing at all, but would be boosted by investment.
The government says boosting oil production - which remains below 1.35 million barrels of oil per day (bpd) against a target of 2 million bpd - would help to ease dollar shortages.
The lack of foreign currency and plunge in the value of the naira has led multinational companies beyond oil, including Procter & Gamble, GSK Plc and Bayer AG, to either leave Nigeria or appoint third parties to distribute their products.
MTN, Africa's biggest telecoms operator, and soap maker PZ Cussons, meanwhile, have attributed losses to Nigeria's currency crisis.
To get the much-needed investment, swifter regulatory approval would help, analysts say, although they also cite other issues,including power shortages and corruption that could be more complicated to address.
"I believe that the country needs to do more to attract investments in the (oil and gas) sector. One of such is improving the speed at which regulatory approvals are granted," Ayodele Oni, energy lawyer and partner at Lagos-based Bloomfield Law Practice said.
Some investors, however, are encouraged.
Kola Karim, CEO of power and energy group Shoreline Energy International, which has operations in Nigeria, said the assets bought by Seplat were "low hanging fruit" which could quickly be turned around to boost production.
He also said executive orders, including one last month that raised to $10 million the amount oil firms can spend without going to tender, would help cut back timelines for projects.
"For the first time in a long time, there's a big alignment from government and the oil companies," Kola said.
Reporting by MacDonald Dzirutwe, additional reporting by Libby George in London and Isaac Anyaogu in Lagos, Editing by Barbara Lewis
Aloqador aktivlar
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.
