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In what appeared a clean break from the past, Nigeria’s federal government on Thursday said it was willing to immediately approve the $2.8 billion onshore assets sale agreement between Shell and a consortium of oil companies in Nigeria.
The Minister of State, Petroleum Resources (Oil), Senator Heineken Lokpobiri, who spoke in an exclusive interview with ARISE News, said that government was only awaiting the document detailing the terms of the deal to give its consent.
Oil giant, Shell, had on Tuesday announced that it had agreed to sell its Nigerian onshore assets to Renaissance, a consortium of four Nigerian firms and one foreign company, for a book value of $2.8 billion.
It said that with the deal, its onshore subsidiary, the Shell Petroleum Development Company of Nigeria (SPDC) will now be operated by ND Western, Aradel Energy, First E&P, Waltersmith and Petrolin, a Swiss firm.
However, Shell stated that the completion of the deal was still subject to approval by the federal government. Under the last administration, arguably all the divestment moves were thwarted by the federal government.
But Speaking on the sidelines of the ongoing World Economic Forum (WEF) in Davos, Switzerland, Lokpobiri affirmed that the decision was part of the Nigerian government’s commitment to fostering a business-friendly environment in the oil and gas sector.
Lokpobiri emphasised that the Nigerian government will not impede legitimate business transactions in the oil and gas sector, stating that: “On the part of the government, once we get the necessary documents, we will not waste time to give the necessary considerations and consent.”
Responding to concerns about International Oil Companies (IOCs) diversifying their onshore assets, the minister highlighted the positive aspects of the diversification.
He noted that Nigeria loses nothing as such moves create opportunities for indigenous companies with the capacity to acquire and professionally manage these assets, leading to increased profitability and the maximization of their potential.
Addressing potential negative impacts on the country, Lokpobiri reassured that the diversification would not adversely affect Nigeria.
“Most of the IOCs are more interested in going deep offshore. Deep offshore is exclusive arena for IOCs which require tens of billions of dollars. The independents or local players may not be able to get such huge funding. It also comes with less community problems.
“No company is willing to leave Nigeria, no company has said that look, we are leaving Nigeria totally, but most of them are interested in divesting from onshore shallow water assets, because they felt that it is better for them to operate deep offshore. So, we lose nothing.
“I can also tell you categorically that the local players have also developed so much capacity to an extent that they can acquire these assets or run them professionally, profitably and so Nigeria doesn’t lose anything.
“In my opinion, it’s another opportunity we have, where these local players can acquire these assets and operate them. Our money is still in our country as opposed to the IOCs’ taking it abroad. We lose nothing in terms of jobs, in terms of accruals to government, we lose nothing,” he stated.
He emphasised the government’s engagement with IOCs regarding the decommissioning of non-productive assets and abandonment issues. The minister stated that concerns raised by IOCs, particularly with Nigerian banks, have been addressed, assuring a safe environment for the handling of funds related to decommissioning and abandonment.
“As a government, we will adhere to the law without jeopardising legitimate businesses,” he added.
The minister reiterated the government’s commitment to addressing sector concerns, including insecurity and aging infrastructure, such as pipelines. He highlighted ongoing engagements with companies to invest in pipeline technology and other critical infrastructures within the oil and gas value chain.
“Let me say it categorically that we’re doing maybe 1.4 million bpd. So if you add the condensate of 350,000, we already surpassing the budget. So, we will have no difficulty in a meeting what is contained in a budget.
“The good thing is that OPEC doesn’t calculate condensates? Condensate is also great crude and it’s more expensive than the bonny lights and other crude that we sell.
“But I also want to say that our temporary inability to produce 2 million barrels of crude has nothing to do with capacity. It is because of the problems we have with insecurity and our aging infrastructure and we’re doing whatever we can to attract new investment in the assets.
“Government is not resting at all on its responsibility of trying to bring criminals to justice, but it has to be multi-pronged approach, and that is why we have a civilian security contract that was awarded some years ago. We also renewing it.
“The little increase we have today is because of the collaboration between the civilian security operators and the government security agencies. And I can assure you that you know, there’s a difference between a local operator and Oyinbo operator as it were, if they see you as their own.
“I believe that if you look at the successful record from the local companies, which are very strong, you see that they have less community problems. They know how to deal with these communities better,” he added.
Lokpobiri announced that the president has approved a licensing bid round, demonstrating the government’s dedication to initiating the process promptly.
On the stalled Mobil-Seplat $1.3 billion deal, Lokpobiri said that the process has almost been concluded, stressing that he had settled all the areas of disagreement between the Nigerian National Petroleum Company (NNPC) and the oil companies.
“I don’t want to speak for the NNPC. But I can also tell you that the NNPC reports to me and I don’t have any indication as at this moment, as to whether that kind of thing (opposing Shell deal) will happen.
“But I can also tell you that the Seplat-Mobil transaction, which was truncated in the last administration has been 99 per cent resolved. I brought the parties together. We have had a series of meetings. We have agreed on the terms.
“It’s just for the NNPC board to sit and approve the terms of the settlement and Seplat board sits and approves the terms of the settlement. It was a big disincentive to the IOCs to make further investments. And so, I brought them together, we have resolved, we have disagreed to agree. So, that matter is resolved.
“Under my watch, I will do whatever I can to see how that kind of situation does not arise again. NNPC had every reason to invoke the right of first refusal. But I have also told them to indicate it on time, so you don’t allow parties to negotiate up to the final point before you say you are interested.
“We have to do things differently. And this government is willing to do things differently so that we can get the results that we deserve as a country,” he stated.
Unlike Angola, Lokpobiri said Nigeria has no intention to leave the Organisation of Petroleum Exporting Countries (OPEC).
“Angola joined OPEC midway. Nigeria is one of the founding members of OPEC. And I know that we have questions like Angola, but it’s better for you to stay in the house and address those concerns than going out.
“I tried to talk to my counterpart in Angola to say Look, don’t leave OPEC, stay in and then continue to argue within the family, but it’s a sovereign country. So it is its prerogative to decide to stay or leave. We will not leave. But we will continue to make our point,” he said.
Emmanuel Addeh
The post Nigeria Ready To Immediately Approve Shell’s $2.8bn Deal with Oil Consortium, Says Deputy Oil Minister Lokpobiri appeared first on Arise News.
