South Africa’s SacOil Holdings has ended its joint venture with Nigeria’s Nigdel United Oil Company and abandoned its oil licence in that country as softer oil prices forced the firm to cut costs.

Global oil prices have dropped by 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 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.

SacOil said in August it had acquired 20 percent in a prospective Nigerian oil licence, and later said in November it had completed research of the site.

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.

 

Source: Reuters