Why ExxonMobil is Cutting Short Its Operation in Nigeria

ExxonMobil, one of the largest oil players on the global stage, is significantly scaling back its operations in Nigeria. This move might not only reduce its physical footprint by downsizing office spaces but also curtailing active operations across the nation. 

ExxonMobil vacates its expansive office space in Lagos, opting instead for a much smaller office in the upscale Ikoyi district. This new location, a stark contrast to the previous 12-floor Mobil House, accommodates only half of the staff and reflects a profound shift in the company’s approach to its Nigerian operations. The cost implications are significant, with the company moving from a $10 million annual lease to presumably lower expenses in the new setup.

The consolidation of office spaces is just the tip of the iceberg. Underneath lies a more pressing issue: the reduction in workforce and potential job losses. While the exact number of affected employees remains unclear, the implications of such a move are profound, not just for the workers but also for the local economies where ExxonMobil has been a significant player.

Broader Industry Trends and Challenges

ExxonMobil’s strategy in Nigeria mirrors a larger pattern observed among other international oil companies in the region. Faced with the need to slash costs and enhance operational efficiencies, these companies are shifting their focus away from more vulnerable onshore projects to offshore and deepwater ventures, where risks of theft and sabotage are markedly lower.

For instance, Shell Plc and TotalEnergies are also adjusting their strategies in Nigeria. Shell recently negotiated the sale of its onshore assets for over $1.3 billion, signaling a move towards more secure and profitable ventures. Similarly, TotalEnergies is looking to divest its stakes in certain joint ventures, following Shell’s lead in reducing exposure to onshore risks.

Why ExxonMobil is cutting down

The primary driver behind ExxonMobil’s operational downscale in Nigeria is the dual challenge of maintaining profitability while ensuring the safety and security of its ventures. The Niger Delta, a region rich in oil, has been plagued by persistent oil theft and pipeline sabotage, severely impacting the bottom line and posing risks to personnel and equipment. 

This untenable situation has compelled ExxonMobil and its peers to reconsider their presence in risk-prone areas, choosing instead to invest in regions where operational threats are minimized.