February 25, 2024

No more business as usual on divestment for IOCs assets – NNPC warns

No more business as usual on divestment for IOCs assets – NNPC warns

Solomon Ezeme
The Nigerian National Petroleum Corporation, NNPC, Monday said it will no longer be business as usual for an investor seeking to acquire a divested assets from the international oil companies (IOCs) operating in the country.

Mele Kyari, Group Managing Director of NNPC, made this known on Monday at the 2021 Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition (NAICE), theme: “The Future of Energy – A Trilogy of Determinants: Climate Change, Public Health, and the Global Oil Market.” held in Lagos.

While expressing readiness in NNPC’s commitment to the pursuit of green energy which stands as a global energy trend in ensuring low-carbon emission.

According to him, the government seeks to develop a comprehensive divestment policy that will guide operations in the petroleum industry.

Kyari said the divestment policy would ensure that only investors with technical, financial and operational capabilities will only be permitted to take full ownership of the IOCs’ assets, with a conscious commitment to adding value to the industry.

He said, “We have seen a whole wave of divestment by major IOCs operating in our country. NNPC as their major partner cannot stop partners from divesting their interests. We can’t do this because we all have the right to migrate our portfolios depending on the circumstance.

“The divestment create challenges for us in ensuring that we get the right and competent investors to take the position and add value to the industry. We have engaged all our partners to ensure that while they have the right of divestment, that there should be no situation where this will become a waterloo of our industry.

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

He explained that the NNPC would make clear distinctions between divestment of shares and operatorship agreements under various joint operating agreements.

According to Kyari, the Corporation will also leverage its rights of pre-emption, as well as evaluating the operational competency and track records of new partners.

He particularly emphasised that attention would be paid to abandonment and relinquishment costs, severance of operator staff as well as third-party contract liabilities.

The NNPC boss noted that the divestment was being driven by the global energy transition which was making the IOCs diversify their portfolios to low-carbon investment opportunities.

Kyari said energy consumption would increase beyond what renewable energy sources can meet by 2050, especially with the anticipated economic growth and rising population of Asia and Africa.

He said, “Building on this convergence, Nigeria as a key player in global energy security is addressing its challenges mainly: fiscal, security and cost competitiveness to stimulate investments in the oil and gas industry.

“This includes the recent passage of the Petroleum Industry Bill, the National Gas Expansion Programme and development of gas infrastructures such as the Ajaokuta- Kaduna-Kano (AKK) and the Obiafu-Obrikon-Oben (OB3) pipelines,’’ he added.

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