CORPORATESSECTOR IN-DEPTH 18 NOVEMBER 2015TABLE OF CONTENTSInternational oil companies with operations in Nigeria have cut costs and reduced onshore exposure2Nigeria's vast reserves will continue to attract investment from oil majors 3 Non-oil multinationals continue to position their operations in Nigeria to benefit from long-term growth5Success will be determined by adopting a local mindset 7 Government policy will play an important role in determining the direction of Nigeria's economy9Investment will follow policy certainty and public infrastructure development 10 Appendix 13ANALYST CONTACTSDouglas Rowlings 971-4-237-9543 Analyst douglas.rowlings@moodys.comSimon Poidevin 971-4-237-9550 Associate Analyst simon.poidevin@moodys.comDavid G. Staples 971-4-237-9562 MD-Corporate Finance david.staples@moodys.comNigeria - Multinational CompaniesLong-term Growth Strategies Resilient Despite Weak Oil Price Environment Summary¯ International oil companies (IOCs) have cut costs and reduced onshore exposure. Many oil majors are reducing capital spending and are taking other steps to cut costs across their operations, including in Nigeria, in response to lower crude oil prices. IOCs have accelerated efforts to sell onshore assets and shallow water assets in Nigeria, driven in part by the government's desire for domestic companies to play a greater role and also the higher security risks compared with offshore developments.¯ Vast reserves will continue to attract investment from oil majors. Oil majors' hydrocarbon production in Nigeria is small in terms of their overall production globally. Companies are taking a long-term perspective on the country. Nigeria has significant proven oil and natural gas reserves but suffered from underinvestment in exploration.¯ Long-term growth prospects continue to spur investment by non-oil multinationals. Consumer products companies, automakers, telecoms service providers and beverage companies are among those positioning their operations to benefit from rising demand for goods and services spurred by the growing size and wealth of Nigeria's population and low penetration rates for certain products. Cement makers stand to benefit from increased demand from large public infrastructure projects.¯ Adopting a local mindset will be key for success. As income levels per capita are still low, setting price points at affordable levels is important. Manufacturing products locally enables them to be adapted more easily to meet consumer tastes and, in some cases, may be a necessity in light of recent foreign exchange restrictions on certain imports.¯ Government policy to play an important role in shaping the economic outlook. Regulation will be applied more stringently under the new government with penalties for infringements. Companies intending to do business in Nigeria will be governed by frameworks driving the development of domestic industry and partnerships.¯ Policy certainty will be key to attracting invest...
