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Anxiety In Nigeria’s Oil Industry As Sinopec Set To Downsize



Leadership Nigeria News Today

Sinopec Oilfield Service Corp plans to cut 4,000 jobs this year citing structural overstaffing, having let go 2,000 employees in the first half, company spokesman Li Honghai has said. The planned lay-offs account for just under 5 per cent of the company’s total staffing. The job reductions include early retirements and cutoff to employment contracts extensions, Li told Reuters over the phone Li said company staffing was bloated due to overrapid expansions during days of high oil Prices. Company returned to profitability in the first half of this year versus net loss a year earlier, due to a rebound in oil prices and pick-up in overseas activities. LEADERSHIP recalls that last year, China’s Sinopec Group hired BNP Paribas to sell its oil business in Nigeria and Gabon, as the state-owned oil giant pares back its presence in Africa. Sinopec and other oil groups including China National Petroleum Corporation and CNOOO, made large acquisitions between 2009 and 2013 with the help of low-cost loans from Chinese state-owned banks.

The hunt for overseas assets was intended to bulk up their energy reserves and meet future demand from China, the world’s second-largest economy. But oil prices fell to about $27 a barrel in 2016 from more than $100 in 2014, making some of these investments unprofitable. Militants were attacking oil and gas facilities in Nigeria, further discouraging Sinopec. China’s economy, which was growing strongly when the company expanded, has also slowed. “Sinopec is trying to sever ties,” one of the people told Reuters. “It has hired BNP to sell (its) assets in Nigeria and Gabon.” Sinopec spent $7.24 billion in 2009 for Switzerlandbased Addax Petroleum, its largest ever foreign oil acquisition, to secure land in Nigeria, Gabon, Cameroon and Iraq that was licensed for extraction and exploration. It offered considerable potential as commodity prices rose but bankers expect the Nigeria and Gabon assets to sell for less than $1 billion. The sources said Sinopec was planning to sell Addax’s onshore and offshore oil and gas production sites in Nigeria and Gabon. Sinopec’s Cameroon operation would be its only remaining project in Africa.


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