Assessment of Political Risks in Nigerian Oil &amp; Gas Investments

Ojukwu, Kelechi; Ajienka, J.A.; Dosunmu, Adewale; Iledare, Omowumi; Ibe, Chidi

doi:10.14445/23939125/ijems-v7i2p112

Cited by 2 publications

(5 citation statements)

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“…Nigeria is among the world’s largest oil-producing nations. Between 1970 and 1999, the domestic market produced almost $231 billion in oil revenue for the Nigerian economy, or between 21 and 48% of the nation’s GDP (Heymans & Pycroft, 2005) According to the 2017 OPEC database, Nigeria’s proved oil reserves totaled 37.5 billion barrels as of the end of 2017 and produced an average of 2 million barrels per day (Ojukwu et al, 2020) with the Niger Delta area being the epicenter of crude oil extraction (Crayton & Fisk, 2020). With billion barrels of confirmed oil reserves, the Nigerian government receives around $20 million every day from its crude oil resource (Oviasuyi & Uwadiae, 2009).…”

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

“…According to estimates, the region's flaring releases around 45.8 billion kilowatts of heat and 1.8 billion cubic feet of gas into the atmosphere each day (Olurin & Agbola, 2003). According to these statistics, Nigeria is projected to have at least 374 oilfields to decommission in the future, with as many as 351 of those fields and 3002 wells already being past their expiration date (Ojukwu et al, 2020).…”

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

“…A noteworthy example is a call from the governor of Akwa Ibom State to the federal government to alert Shell to the 32 oil wells that have been abandoned since 1995 that pose a major environmental risk to the area (Business and Maritime West Africa, 2012). In short, activists demanded that Shell either reactivate the wells and facilities to provide work or appropriately abandon the wells to protect the environment (Ojukwu et al, 2020). In the Niger Delta region, the past two decades have been characterized by persistent community unrest that has been made worse by insurgency and pipeline disruptions (Ojukwu et al, 2020).…”

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

“…In short, activists demanded that Shell either reactivate the wells and facilities to provide work or appropriately abandon the wells to protect the environment (Ojukwu et al, 2020). In the Niger Delta region, the past two decades have been characterized by persistent community unrest that has been made worse by insurgency and pipeline disruptions (Ojukwu et al, 2020). In addition, orphaned, neglected, and abandoned infrastructures result in major air pollution, contaminated groundwater, contaminated soil, and continual heat around flare pits, which has led to the extinction of aquatic life, careless canal building, and trash disposal (Oviasuyi & Uwadiae, 2009).…”

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

“…1 According to the Minister of Niger Delta Affairs, the Nigerian coastline region has over 13,000 abandoned infrastructure projects (Nathaniel, 2021). The operation of various multinational oil companies has engendered major socioeconomic and environmental issues for the people of the Niger Delta region (Denedo et al, 2019; Eweje, 2006, 2007; Idemudia, 2009; Odera et al, 2018; Oviasuyi & Uwadiae, 2009; Ojukwu et al, 2020; Oviasuyi & Uwadiae, 2009, 2009). Yet, scholarly attention in this area is lacking and the authors are unaware of any work that focuses on the Niger Delta region.…”

Section: Introductionmentioning

confidence: 99%

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Beyond Oil Spill Cleanup, Abandoned Infrastructures Affect the Environment Too – A case study of the Lived Experiences of the Niger Delta People

Crayton

Naher

2022

Public Works Management & Policy

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Spills by multinational petroleum corporations have scarred the Niger Delta and as a result, many residents are relocating, hence, the rise of abandoned idled, and neglected infrastructures. The purpose of this study is to understand how neglected infrastructures have shaped the living conditions of people in the Niger Delta communities. Employing a phenomenological case study approach, this paper focuses on the lived experiences of the Niger Delta people of Nigeria to explain the correlation between oil exploration activities and abandoned or neglected infrastructures. Contributing to the theoretical perspective on sustainability, development, and infrastructural issues, this study finds that corruption, poor governance, lack of accountability, laws, finances, resources, and education are also factors promoting the rise of abandoned infrastructures in the Niger Delta. The findings of this study provide crucial insights to government, policymakers, and environmental justice advocates who may consider using the discussions to address socio-economic issues in developing countries.

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Section: Literature Review and Case Backgroundmentioning

confidence: 99%

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

Section: Literature Review and Case Backgroundmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Beyond Oil Spill Cleanup, Abandoned Infrastructures Affect the Environment Too – A case study of the Lived Experiences of the Niger Delta People

Crayton

Naher

2022

Public Works Management & Policy

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Estimating Fair Market Value of Petroleum Assets in Nigeria: A Risk-Based Approach

Ojukwu

Iledare

Ajienka

et al. 2021

Day 3 Wed, August 04, 2021

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Many independent Nigerian oil & gas companies have emerged over the last decade out ofthe divestments of ageing petroleum assets by multinational oil companies. Thesetransactions are marked by pervasive cases of overvaluation and huge gap in offers that leadto unnecessarily high acquisition costs. Petroleum analysts around the world adopt the Discounted Cashflow Analysis method forestimating present value of future oil production revenues. Unfortunately, project economicsusing conventional analysis does not de-risk the reserves components appropriately oraccount for the excess and political risk premiums. Even when analysts derive the NetPresent Value from conventional evaluation, say at discount rates of say 10% or 15%, theyface the dilemma of extracting offer price from that figure. Some post a conservative offerbased on 50% NPV, while others throw in all the NPV in a scheme to win the bid at all cost. Some also start by guesstimating value by rule of thumb and then offer the NPV that is leftbehind. The decision to offer a given percentage of the NPV is entirely subjective and variesamongst investors and as such does not depict a logical perception of market value, or therisks thereof. Furthermore, by omitting political risk, buyers are invariably ignoring the mostcrucial risk of all. The adoption of different bases of reserves tend to compound the problemby yielding NPVs that are few and far between each other. They are usually based on un-risked ‘proved plus probable’ (2P) reserves, which is highly speculative and unrealistic forvaluation. For the first time, the concerns of high purchase price and offer gaps were debuggedleveraging the new Risk-Based Valuation approach which is based on a modified Discounted Cashflow model. A research deeply investigates the problems first by reconstructing originaltransaction to identify the root causes. Furthermore, the study concludes that buyers arepaying on average 4 times the value and that regulating reserves base is fundamental inorder to minimize offer gaps that sometimes tend to a billion dollars for large deals. Thus, the Risk-Based Discounted Cashflow Analysis technique can help prevent overpricing orunderpricing of Nigerian assets, minimize offer gaps in the market as well as account for theimpact of political risks (or its mitigation) in valuation.

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Assessment of Political Risks in Nigerian Oil & Gas Investments

Cited by 2 publications

References 0 publications

Beyond Oil Spill Cleanup, Abandoned Infrastructures Affect the Environment Too – A case study of the Lived Experiences of the Niger Delta People

Beyond Oil Spill Cleanup, Abandoned Infrastructures Affect the Environment Too – A case study of the Lived Experiences of the Niger Delta People

Estimating Fair Market Value of Petroleum Assets in Nigeria: A Risk-Based Approach

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