NNPC Considers Asset Divestment as Nigeria's Oil and Gas Industry

NNPC Considers Asset Divestment as Nigeria’s Oil and Gas Industry Gains Momentum

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During the Nigerian Oil and Gas Energy Week in Abuja, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPC), Mele Kyari, revealed that the national oil company is contemplating divesting some of its assets to competitors in the oil and gas industry. Kyari clarified that if necessary, the NNPC will exit its current Petroleum Sharing Contracts (PSC) arrangements with certain operators and seek funding through Incorporated Joint Venture (IJV) arrangements.

Speaking at the event with the theme “Powering Nigeria’s Sustainable Energy Future,” Kyari emphasized that the NNPC, governed by the Petroleum Industry Act, will operate as a commercially-oriented company and no longer enjoy any undue advantages. He assured stakeholders that the NNPC will operate like other private sector entities in the industry, paying taxes, royalties, and dividends to shareholders.

Kyari highlighted that the NNPC is positioning itself as a world-class profit-driven entity, committed to complying with fiscal and legal requirements. He discussed ongoing initiatives to expand gas infrastructure, deliver gas across West Africa and potentially Europe, and enhance liquefaction capacity of the Nigerian Liquified Natural Gas (NLNG). He also mentioned the positive impact of subsidy removal in freeing up capital for sustainable energy supply.

Regarding the divestment plans, Kyari stated that the NNPC intends to sell part of its equity to interested buyers among its industry counterparts. He emphasized that such divestment aligns with the law, making the NNPC similar to any other company and fostering a different business environment. Kyari acknowledged that current partnerships account for over 80% of Nigeria’s oil and gas production.

The event also featured an audio-visual message from the Secretary General of the Organization of Petroleum Exporting Countries (OPEC), Haitham Al Ghais, who pledged support and collaboration with Nigeria’s oil industry. Al Ghais stressed the importance of various energy sources, including fossil fuels, in meeting global energy demand. He highlighted the need for investments in innovative solutions such as carbon capture, utilization and storage, hydrogen projects, and the circular carbon economy.

In response to calls to halt hydrocarbon production, Mr. Gabriel Aduda, the Permanent Secretary of the Ministry of Petroleum, argued that it is unfair to burden developing countries like Nigeria, which have lower carbon emissions. He emphasized the need for a balanced energy transition approach that takes into account the unique circumstances of developing nations.

Abdulrazaq Isa, Chairman of the Independent Petroleum Producers Group (IPPG), called for the expedited closure of ongoing divestments by international oil companies (IOCs) to mitigate potential industry consequences. Isa also highlighted the importance of a strong governance framework, addressing gaps, and promoting security in the Niger Delta region to achieve the objectives of the Petroleum Industry Act (PIA) and enhance competitiveness in Nigeria’s oil and gas industry.

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