From Uche Usim, Abuja
The Nigerian National Petroleum Corporation (NNPC) on Monday listed a plethora of outstanding issues that have to be totally resolved before major oil companies can successfully divest their interests overseas.
They are as follows: abandonment and relinquishment costs; severance of operator staff; third party contract liabilities; competency of the buyer; post-purchase technical, operational, and financial capabilities, especially in the era of activist investor’s sentiments against funding of fossil fuel projects and alignment with Nigeria national strategic interest.
The Group Managing Director of the NNPC, Mr Mele Kyari, made the disclosure in Lagos at the 2021 edition of the Nigeria Annual International Conference and Exhibition (NAICE) organised by Society of Petroleum Engineers (SPE) with the theme: “The Future of Energy: A Trilogy of Climate Change, Public Health & Global Oil Market”.
According to him, the NNPC management’s decision to unveil a Comprehensive Divestment Policy (CDP) that will guide the entire divestment process follows the structured exit plans currently being implemented by Shell and other NNPC partners, as they seek to invest in cleaner and more environmentally friendly energy in other climes.
Kyari explained that sorting out the aforementioned matters with the oil majors would ensure a win-win situation for all parties, rather than hurting the Nigerian economy in a hurried departure.
According to Kyari, while the NNPC partners reserve the right to divest their interests, the national oil company also has a duty to provide clear-cut guidelines and criteria for such divestment to guarantee equity, fairness and justice.
He said: “We are seeing a wave of divestment by oil majors operating in Nigeria. NNPC as a national oil company cannot stop partners from divesting their interest, even though it creates a challenge for us in ensuring that we get right and competent investors to take position and add value to the assets.
“NNPC will ensure that Nigeria’s National strategic interest is safeguarded, by developing a Comprehensive Divestment Policy”.
According to Kyari, the NNPC will, in subsequent deals, adjust its rules of engagement by making clear distinctions between divestment of shares and operatorship agreements under various joint operating agreements, while leveraging its rights of pre-emption as well as evaluating the operational competency and track records of new partners.
Kyari noted that the imperatives of energy transition and the influence of activist investors on the global energy industry are making oil and gas companies diversify their portfolio to low-carbon investments by whetting the appetite for investment in cleaner energy sources like; wind, solar, hydrogen, natural gas and bio-fuels.