INTRODUCTION

Divestment also referred to as ‘divestiture’ is the process wherein a company sells a portion of its assets, often to enhance overall company value and achieve greater operational efficiency. This strategic plot is frequently utilized by companies to offload peripheral assets, enabling their management teams to refocus on their core business with increased precision. Companies evaluate the degree of operational risk associated with investments, identifying those that fall short of the designated average internal rate of return, and they can decide to move their operational portfolio to newer and more profitable operations. The initial wave of divestments in Nigeria’s oil and gas sector commenced in 2010, spurred by challenges such as oil theft and militancy, alongside governmental efforts to promote local ownership of upstream assets through its indigenization policies.

However, contemporary divestment endeavours are propelled by various factors, including ageing infrastructure, inadequate investment, vandalism, and challenging operating conditions. Additionally, there is a pressing need to align with the shift towards green energy and climate action initiatives, driven by corporate commitments to emission reduction and the ultimate goal of achieving net zero emissions by 2050. In recent times, International Oil Companies (IOCs) have divested interests in upstream petroleum assets, particularly Licenses and Leases in the onshore and shallow water terrains of Nigeria. According to a Wood Mackenzie report[3], divestments in Nigeria since 2010 have totalled $21 billion, with a pending $1.2 billion ExxonMobil sale.  Some of the notable divestments in Nigeria in recent years are:

Shell’s divestment of its operated Joint Venture (JV) Licences held by its Nigerian onshore subsidiary, the Shell Petroleum Development Company (SPDC) to Renaissance, a consortium of five companies comprising four Exploration and Production (E & P) companies based in Nigeria and an international energy group. This includes a…