Oil
IOC’s divestment of oil assets, blessing in disguise – NNPC boss
….Says govt set to begin bid rounds on oil assets
HOUSTON, TEXAS – The Federal Government has insisted that there was no cause for alarm over on-going divestment of petroleum assets by multinational oil companies operating in the country, since those assets are readily taken up by indigenous operators.
The Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Andy Yakubu, who stated this in a question and answer session at the on-going Offshore Technology Conference, OTC, taking place in Houston, Texas, further disclosed plans by the federal government to commence the bidding process for some of the abandoned assets by the oil majors once it completes a review on them.
He observed that a lot of the oil assets that have been divested by the oil majors have mostly been abandoned and it was only a good thing that they were being taken over by local participants for onward exploitation and production of crude.
Particularly, he noted, Shell divested about five assets which were taken up by indigenous operators. We also have other assets that are being listed for farming in by indigenous participants because they have not received adequate attention by the IOCs.
“The Department of Petroleum Resources, DPR, has itemized quite a number of these assets which had been neglected by the IOC, and they are receiving presidential attention. As soon as they properly compiled the bid rounds will commence and the assets will be made available,” Yakubu announced.
He pointed out that there have been more divestments by the IOCs, including Conoco Phillips, Total and Exxon Mobil, adding that those assets are expected to end up in indigenous hands. “There is a conscious effort to build the capability and capacity of indigenous operators in the upstream sector of the oil and gas industry. That is the good news,” he added.
He lamented that indigenous participation “has not been high enough but, we must add, that there has been significant improvement over the years. As at last year, we were just about 10 percent of total production but because of increased government attention we are expanding the capacity of upstream participation, and within the past couple of years there has been a significant divestment of assets from the majors and those assets were the ones that they (majors) actually did not pay much attention to.
According to the NNPC boss, Nigeria is very central and strategic in contributing to the energy mix of the world. “As at today, the country has over 36 billion barrels of crude reserve and 187tcf of gas reserves and that makes us about the 12th highest reserves in the world.
“These reserves are spread across mainly the Niger Delta basin. There is of course additional potential which has not been exploited, and we believe when we go into that it is estimated that we are going to strike almost 600tcf of gas.
So, there is no doubt that we have a very huge asset base and a very robust reserve to production ratio. Nigeria, for a long time to come, will continue to remain central and strategic and will continue to dominate our sub-region, even as we remain key and prominent in the global sphere,” he noted.
Yakubu further noted that the fiscal regime for the industry as contained in the Petroleum Industry Bill, PIB, currently in the National Assembly would definitely be in the interest of the country “in terms of revenue flow and it will also encourage investors to come in and play in the hydro-carbon industry in Nigeria.”
He also observed that given that existing refineries in the country were built more than two decades ago with limited production levels, and with the increase in population and consumption rates over the period, there was an urgent need to invest in additional refining capcity to meet the growing demand for petroleum products across the country.
“We are taking every step to ensure the production capacity in our existing refineries. As at last week, we announced a recovery of about 10,000 litres capacity of crude oil daily. This in-country capacity is more than two times what it was about two years ago.
“This is going to be closely followed by the green-field refineries some of which are already under construction across the country. The additional capacity from the green-field refineries is expected to make up for about the 50 percent capacity that is needed today. Our daily consumption is over 35 million litres, and the current in-country production capacity is about 17 million litres, so the additional capacity from the green-field will be needed.
“However, we must get the business model right. There are quite a number of things that are wrong, and there is no investor that will come and invest in a deregulated environment. There are things that we need to do upfront to encourage the investors to come and invest,” Yakubu added.
In a strategic move to revitalize Nigeria’s oil and gas sector, the Federal Government has unveiled two key fiscal incentives aimed at attracting investment and enhancing energy security.
The announcement was made by Mr. Wale Edun, the Minister of Finance and Coordinating Minister of the Economy on Wednesday.
The first initiative, the Value Added Tax (VAT) Modification Order 2024, introduces critical exemptions for essential energy products and infrastructure, including Diesel, Feed Gas, Liquefied Petroleum Gas (LPG), Compressed Natural Gas (CNG), Electric Vehicles, Liquefied Natural Gas (LNG) infrastructure, and Clean Cooking Equipment.
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These exemptions are designed to reduce living costs for Nigerians, promote energy security, and accelerate the transition to cleaner energy alternatives.
The second initiative, the Notice of Tax Incentives for Deep Offshore Oil & Gas Production, offers new tax relief options for deep offshore exploration projects.
This measure aims to position Nigeria’s deep offshore basin as a premier destination for international oil and gas investments, boosting the country’s appeal to foreign investors.
These reforms are part of a broader set of policy initiatives, known as Policy Directives 40-42, endorsed by President Bola Ahmed Tinubu.
The directives reflect the administration’s commitment to fostering sustainable development in the energy sector and enhancing Nigeria’s competitive edge in the global oil and gas market.
By Yemie Adeoye
NIGERIA’s President Bola Tinubu has announced that the protracted ExxonMobil-Seplat upstream oil divestment will be formally approved by the Minister of petroleum within a matter of days, just as he announced his government’s intention to expand the Compress natural Gas, CNG buses initiative.
The President who stated this during his Independence day nationwide broadcast stated that the move is in line with his administration’s commitment to free enterprise, free entry and free exit in investments which is the hallmark of his administration investment policy.
“Fellow compatriots, our administration is committed to free enterprise, free entry, and free exit in investments while maintaining the sanctity and efficacy of our regulatory processes. This principle guides the divestment transactions in our upstream petroleum sector, where we are committed to changing the fortune positively. As such, the ExxonMobil Seplat divestment will receive ministerial approval in a matter of days, having been concluded by the regulator, NUPRC, in line with the Petroleum Industry Act, PIA. This was done in the same manner as other qualified divestments approved in the sector.”
The President also seized the opportunity to plead with Nigerians to be patient with his administration’s reform policies. “As your President, I assure you that we are committed to finding sustainable solutions to alleviate the suffering of our citizens. Once again, I plead for your patience as the reforms we are implementing show positive signs, and we are beginning to see light at the end of the tunnel”.
“Our energy transition programme is on course. We are expanding the adoption of the Presidential Initiative on Compressed Natural Gas for mass transit with private sector players. The Federal Government is ready to assist the thirty-six States and FCT in acquiring CNG buses for cheaper public transportation.
Fellow Nigerians, while we are working to stabilise the economy and secure the country, we also seek to foster national unity and build social harmony and cohesion. Our economy can only thrive when there is peace”. he enthused.
As part of the administration’s push to improve Ease of Doing Business (EoDB), Nigeria’s Vice President Kashim Shettima has expressed support for ExxonMobil’s plan to invest $10 billion in the country’s deep-water oil sector.
Speaking on Wednesday, September 25, 2024, during a meeting with ExxonMobil executives at the 79th United Nations General Assembly (UNGA) in New York, Shettima called the investment “a clear testament to the administration’s economic reforms and investor-friendly policies.”
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This announcement follows news that international maritime company DP World intends to develop a multibillion-dollar port project in Nigeria.
Stanley Nkwocha, Senior Special Assistant to the President on Media and Communications, shared the development in a statement on Wednesday. He quoted Shettima as saying: “ExxonMobil’s potential investment aligns with the vision of President Bola Ahmed Tinubu’s administration for a more investment-friendly Nigeria.
We are committed to fostering an environment that supports such transformative projects.”Shettima also discussed the administration’s broader efforts to improve the ease of doing business, highlighting the “Renewed Hope Agenda,” which aims to simplify bureaucratic processes, enhance transparency, and offer fiscal incentives to attract global investors.
“Our administration has taken bold steps to unify the exchange rate, remove fuel subsidies, and implement tax reforms. These measures, though challenging in the short term, are intended to create a stable and predictable business environment in the long term,” he added.
On the oil and gas sector, Shettima mentioned that the government is revising the fiscal framework for deep-water operations to attract investment while ensuring fair returns for the Nigerian people.
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