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NNPC to acquire divested assets of IOCs

By on July 9, 2013

Nigerian National Petroleum Corporation, NNPC, Monday, said it will acquire the divested assets of International Oil Companies, IOCs, in Nigeria.

The NNPC has also borrowed about N224 billion ($1.4 billion) from the international financial market to settle the N496 billion ($3.1 billion) indebtedness of its subsidiary — the Pipeline and Products Marketing Company, PPMC — to importers of petroleum products into the country over the last three years.

Speaking on plans to acquire the divested interests of oil majors, Mr. Andrew Yakubu, Group Managing Director, NNPC, said in a statement that it is prepared to take over and operate the assets sold off in Nigeria by foreign oil companies.

He said, “With the divestment of the oil majors, the Nigerian Petroleum Development Company, NPDC, comes across as the major option for indigenous participation that will replace companies like Shell and other companies that wanted to divest their equities.”

He disclosed that the NPDC has been repositioned to ensure that the acquired assets remain productive to boost the company’s reserve base and ultimately ensure increases in revenue for Nigeria.

According to data from the NNPC, NPDC’s crude oil production has averaged 130,000 barrel of oil per day with plans to raise output to 250,000 barrel per day by 2015.

This planned increase in production, the NNPC said, will be driven by production from fields sold off by the international oil majors.

NPDC has acquired over 55 per cent equity stake in four onshore oil assets divested by Shell, Eni and Total, including the promising Oil Mining Lease, OML 30, which is projected to be capable of producing around 300,000 barrels per day in the near future, up from 35,000 barrels per day at present.Analysts are of the view that the NNPC stands the chance of acquiring the divested interests, as its partnership with the oil majors means that it will be given the right of first refusal in the acquisition of the assets.

On the N224 billion loan deal, reports said the loan deal was agreed in December but it took six months for the money to be disbursed as the deal structure needed to be validated with multiple stakeholders and Nigerian authorities.

The prepayment facility, guaranteed by future oil sales, was led by Standard Chartered Bank and also included BNP Paribas, Societe Generale, Natixis and several Nigerian banks.

The N224 billion loan, according to reports, will be repaid by the NNPC over a period of five years, while it will use as collateral, 15,000 barrels per day of oil production.

The remaining $1.7 billion of debt is owed to trading houses as well as oil majors, BP, Royal Dutch Shell and Total for supplies of fuel in the last three years.

Reports said the NNPC’s ability to repay the balance of the debt will be more challenging as it has committed most of its available oil flows for the next five years, which can generate additional cash only if oil prices stay much above $75 per barrel.

“Some more recent PPMC creditors did not get any proceeds from the recent drawdown, and cannot afford to be waiting and financially bleeding for another five years with no clear repayment roadmap.

“However, a solution could be found via an increase of the allocation of oil for creditors,” a source said.