The last has not been heard of the effects of the downward trend in global oil prices. Firms are struggling to break even in these tough times of unwanted surplus and political gimmicks by oil cartels that has brought sudden change of tides in the global oil industry.
Quick among the survival techniques is to cut costs and avoid exploration in high risk regions of the world. Nigeria, indeed, has and is still receiving its fair share of the oil tragedy.
Recently, SacOil Holdings ended its joint venture partnership with a local oil firm, choosing to reclaim her loses by selling her share of the joint venture to the local firm, all in the name of saving costs and maximizing profits.
Nigdel United Oil Company absorbed without rancour the sudden change of plan by SacOil, hoping like the saying goes that a patient dog eats the biggest bone. Could this deal be the turning point for the company , only time will tell.
Global oil prices dropped to about 40 percent over the last year on oversupply concerns, forcing many companies to avoid risky exploration. Some oil companies are also forming alliances to ride out the oil price trough.
Chief executive Thabo Kgogo said in a statement that the termination of the joint venture improves the company’s financial position and will reduce future financial exposure emanating from such higher risk assets.
Sacoil said it would be refunded by Nigdel for all costs it spent on the project.
The oil and gas company, with operations in Malawi, Democratic Republic of Congo and Botswana, said in April its full-year earnings would be at least 20 percent lower.
