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NNPC to hold first IPO by 2018 – Kachikwu

By BusinessNews Staff on January 14, 2016

The federal government is planning to hold its first initial public offering (IPO) of assets owned by the Nigerian National Petroleum Corporation (NNPC) in 2018, the Minister of State for Petroleum Resources, Mr. Emmanuel Kachikwu, has said.
“It’s inevitable,” Kachikwu, who also heads the NNPC, said on Tuesday in an interview in Abu Dhabi.
“Part of the cleaning up process that we’re doing is to prepare for that,” Bloomberg quoted him as stating.
The plan is to sell NNPC’s shares in its refining and distribution business and “select” exploration and production assets to the public, he said.
NNPC manages Nigeria’s stakes in joint ventures with international oil companies that pump the country’s crude. It also operates refineries and a distribution network of depots and pipelines across the country of about 180 million people.
Kachikwu also said yesterday that some members of the Organisation of the Petroleum Exporting Countries (OPEC) had requested an emergency meeting, adding that current market conditions support the need to hold such a gathering before the June 2 scheduled meeting of the cartel.
The United Arab Emirates (UAE), however, moved to quash talks of a potential emergency meeting as the country’s Energy Minister Suhail bin Mohammed al-Mazroui said that the current OPEC strategy was working, adding that a period of between one and one-and-a-half years was needed to allow oil prices to rebound.
Reuters quoted Kachikwu as telling reporters at an energy conference in Abu Dhabi that there was a lot of push from various blocs within OPEC for the meeting.
“A couple of countries, I don’t want to mention names,” he said when asked if any had requested holding an emergency meeting.
According to him, any meeting that would take place would be to review OPEC’s position to see if there was any need to change its strategy, adding that the meeting could take place in February or March.
OPEC heavyweight, Saudi Arabia, which has resisted calls for a cut in production to help boost prices, was also said to be against an emergency meeting.
But Kachikwu insisted that “Saudi Arabia has never held the position that it does not want to talk”.
“In fact, it was very supportive of a meeting before June, at the time when we held the December meeting, if (there was a) consensus call for it,” Kachikwu added.
However, the UAE has moved to quash talk of a potential emergency meeting of OPEC.
UAE Energy Minister later told the same conference that the current OPEC strategy was working, adding that time was needed to allow this to happen — perhaps between one and 1-1/2 years.
“I’m not convinced OPEC alone can change or can solely unilaterally change this strategy just because we have seen a low in the market,” Mazroui said.
Mazroui added that while the first half of 2016 would be “tough” for the oil market, there would be a gradual recovery later in the year, aided by an expected drop in non-OPEC production.
But two OPEC delegates from outside the Gulf were sceptical an emergency conference would take place.
“There won’t be any meeting,” Reuters quoted one of the OPEC delegates from an African OPEC country as saying.
OPEC’s strategy of maintaining production levels, instead of reducing supply to allow prices to recover, has been aimed at defending market share at the expense of higher-cost producers such as those in the U.S. shale sector.
The supply glut is likely to be exacerbated in 2016 by the return of Iranian supply to the market, once Western sanctions have been lifted.
“I think all the members including Iran have the right to increase their production. I don’t think we are going to restrict anyone,” Mazroui said.
Such prospects have led oil analysts to downgrade their forecasts in recent days, with Standard Chartered saying prices could drop to $10 a barrel, while the International Monetary Fund (IMF) predicted $20 per barrel.
Despite UAE’s reluctance for the emergency meeting, Nigeria and other non-Gulf OPEC members might get their way, as oil dropped below $30 a barrel in New York for the first time in 12 years on concerns that turmoil in China’s markets will curb fuel demand.
According to Bloomberg, West Texas Intermediate (WTI) crude tumbled to the lowest since December 2003. Concerns that China’s economic growth may slow have soured investors on the prospects for a quick recovery, turning hedge funds the least bullish in five years.
A rapid appreciation of the US dollar may send Brent oil to as low as $20 a barrel, Morgan Stanley also said yesterday.
Oil extended a 70 per cent drop since June 2014 as volatility in Chinese markets fuelled a rout in global equities and US stockpiles remained more than 120 million barrels above the five-year average.
Saudi Arabian Oil Co., the world’s biggest crude exporter, confirmed on last week that it was studying options for a share sale, including listing “a bundle” of refining subsidiaries.
“Psychology has completely taken over,” said Stephen Schork, president of the Schork Group Inc. in Villanova, Pennsylvania. “Market sentiment has shifted so far that it’s self-fulfilling. There’s been a big cutback in CFTC positions, which shows that everyone is heading for the exit.”
WTI for February delivery fell $1.28, or 4.1 percent, to $30.13 a barrel at 2.07 pm on the New York Mercantile Exchange. The contract touched $29.93, the lowest intraday price since December 2003. Prices lost 30 per cent last year.
Brent for February settlement decreased $1.05, or 3.3 per cent, to $30.50 a barrel on the London-based ICE Futures Europe exchange. It touched $30.34, the least since April 2004. The European benchmark crude traded at a 37 cent premium to WTI.