Only Investors With Technical, Operational Capabilities Can Takeover Assets Divested By IOCS–NNPC

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CBN

NNPC to develop comprehensive divestment policy for IOCs

Olusola Bello

Henceforth, only investors with technical, financial and operational capabilities would be allowed to take over divested assets of the international oil companies operating in the country.

According to the Mele Kyari, group managing director of the NNPC, the action is meant to ensure value addition in the industry.

The NNPC boss who spoke at the opening ceremony at the ongoing 2021 Society of Petroleum Engineers, SPE, International Conference, and Exhibition, in Lagos, said it would no longer be business as usual for investors seeking to acquire the assets of International Oil Companies, IOCs, in the country.

He said: “We have seen a whole wave of divestments 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 circumstances.

“The divestments 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 divestments, that there should be no situation where this will become a waterloo of our industry.

“Therefore, 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, it will also leverage its rights of pre-emption as well as evaluate the operational competency and track records of new partners.

He added that attention would be paid to abandonment and relinquishment costs, severance of operator’s 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 investments.

Kyari said energy consumption would increase beyond what renewable energy sources could 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.”

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