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

Oil prices in the international market have reportedly dropped by about 40 per cent over the last year on oversupply concerns forcing many companies to avoid risky exploration, and some oil companies are also forming alliances to ride out the oil price trough.

Reuters quoted the chief executive of the company, Thabo Kgogo, to have explained 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 the costs it incurred on the project. The company said in August that it had acquired 20 per cent in a prospective Nigerian oil licence, and later in November it said that it had completed research on 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 per cent lower.