The Nigerian National Petroleum Corporation (NNPC) says it will soon develop a Comprehensive Divestment Policy for International Oil Companies ( IOCs) operating in the country to protect strategic national interest.
Mr Mele Kyari, the Group Managing Director, NNPC disclosed this in Lagos Monday at the 2021 Society of Petroleum Engineers (SPE) Nigeria Annual International Conference and Exhibition (NAICE). The theme of the conference was: “The Future of Energy – A Trilogy of Determinants: Climate Change, Public Health, and the Global Oil Market.”
Kyari said the divestment policy would ensure that only investors with technical, financial and operational capabilities take position of the IOCs assets thereby adding value to the industry.
“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 right and competent investors to take 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.”
Kyari said going forward, 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 evaluating the operational competency and track records of new partners.
He said attention would be paid to abandonment and relinquishment costs, severance of operator staff as well as third party contract liabilities.
He said that the divestment was being driven by global energy transition which was making the IOCs diversify their portfolios to low-carbon investments.
Kyari however, said that 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.
“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 include the recent passage of the Petroleum Industry Bill, the National Gas Expansion Programme, and development of gas infrastructure such as the Ajaokuta- Kaduna-Kano (AKK) and the Obiafu-Obrikon-Oben (OB3) pipelines.’’
Kyari reiterated Nigeria’s commitment to energy transition in the near future, adding that its huge gas resources would serve as a vehicle for the country’s transition to cleaner sources of energy.
Earlier, Mr Olatunji Akinwunmi, the Chairman, SPE, Nigeria Council, said it was in the interest of the country’s oil and gas industry to be in phase with the rest of the world regarding energy transition.
“Reduction of carbon emissions could be achieved by more efficient operations, focusing on transition to gas exploration and development to replace coal in electricity generation.
“In addition, novel technologies as well as digital transformation initiatives should help in the direction of reducing both emissions and cost, which would render our products more accessible, more competitive, and more acceptable.’’