NNPC plans policy guidelines for divesting IOC partners

The Nigerian National Petroleum Corporation (NNPC) has stated that it will lay out procedures to advise its partners (International Oil Companies) who seek to exit joint ventures or the Nigerian oil and gas business.

Shell declared in May that its Nigerian onshore oil portfolio was “no longer compatible” with its strategic goals.

“We have reduced the total number of licences in onshore Nigeria by half. But unfortunately, our remaining onshore operations continue to be subject to sabotage and theft,” Chief Executive Officer, Ben van Beurden, told investors at the company’s AGM.

Early this year, Shell Petroleum Development Company of Nigeria Limited, Total E&P Nigeria Limited and Nigerian Agip Oil Company Limited concluded the sale of their combined 45 per cent interest in Oil Mining Lease 17 and related assets in the Eastern Niger Delta to TNOG Oil and Gas Limited.

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The Group Managing Director, NNPC, said on Monday that Nigeria, as a key player in global energy security, was addressing its challenges, mainly fiscal, security and cost competitiveness, to stimulate investments in the oil and gas industry.

Kyari said this in Lagos while delivering an address at the opening ceremony of the Nigeria Annual International Conference and Exhibition organised by the Society of Petroleum Engineers.

He said, “NNPC, as national oil company, is leading multiple initiatives to address this and other issues.

“As we celebrate the passage of the PIB, we have moved our focus to improving security architecture through collaboration with major stakeholders.”

According to him, the Nigerian Upstream Cost Optimisation Programme is working with operators and service contractors to challenge cost of operations and increase profitability and growth in the industry.

Kyari said, “On the other hand, we are seeing a wave of divestment by oil majors operating in Nigeria. NNPC as a national oil company cannot stop partners from divesting their interest, even though it creates challenge for us in ensuring that we get right and competent investors to take position and add value to the assets.

“The NNPC will ensure that Nigeria’s national strategic interest is safeguarded by developing a comprehensive divestment policy that will provide clear guidelines and criteria for divestment of partners’ interest.”

He said the corporation would make clear distinctions between divestment of shares and operatorship agreements under various joint operating agreements, while leveraging its rights of pre-emption and evaluating the operational competence and tract records of new partners.

Kyari said in order to sustain a prosperous business environment, particular attention would be paid to abandonment and relinquishment costs, severance of operator staff, third party contract liabilities, competency of the buyer, and post purchased technical, operational and financial capabilities.

He said the NNPC would declare its first dividend to Nigerians as it prepares to release its 2020 financial statements in the third quarter of this year.

He said, “Everything we are doing must align with the wider national interest. And therefore, NNPC, being the representatives of all of us and, is, of course, a very potential global player – this is our ambition and we are getting there.

“And I can tell you, within the next month or two, we will publish our statement of accounts for 2020. And I can also confirm to you that for the first time in our history, we will declare dividend to the Nigerian people.”

Kyari said the corporation would play a key role in the global transition to low carbon energy in the near future.

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