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Indigenous Coys jostle for $9bn NNPC’s stake in IOCs

There are indications that the Federal Government may be compelled to give indigenous oil and gas companies wishing to bid for the stake of the Nigerian National Petroleum Corporation in some International Oil Companies (IOCs) the first right of refusal.

Some of the indigenous oil companies who spoke to Daily Sun in separate interviews on the sidelines of the ongoing Nigeria Oil and Gas Conference (NOG) conference said it was imperative for the IOCs to work more in exploring activities in deepwater operations.

They argued that the IOCs should allow the indigenous companies build capacity based on the competence they have garner over the years through the implementation of the Local Content Act.

The sale of 15 to 20 per cent stake in the JV assets means the government’s cash call payment would reduce.

Renaissance Capital had estimated that the government could generate revenue of $9bn from the sale, according to an e-mailed note.

Former Minister of Budget and National Planning, Senator Udo Udoma, had in March, said the Federal Government plans to cut its stakes in joint oil ventures with international oil companies to 40 per cent this year in a move to improve finances. But, the managing Director and Country Chair and Managing Director of Shell Companies in Nigeria and Shell Petroleum Development Company in Nigeria, Mr. Osagie Okunbor, warned that the country should be careful in selling the stake to just any entity.

Okunbor who was represented by the Managing Director of Shell Nigeria Exploration and Production Company (SNEPCO) Mr. Bayo Ojulari, said the sanctity of the Joint Operator Agreement (JOA) was very important for the benefit and reputation of Nigeria, so that we are seen as a country that does things in a very transparent way.

The JOA, according to him, has certain prescription which has been followed in all previous divestments, adding that, it was important that the government follows that to ensure that the operators do not feel bullied because that will not help Nigeria.

‘‘The second point that is important and which the JOA prescribes is that, if you are adding either partner into the JV, the current partner must ensure that the ‘marriage’ can work. We have seen several ‘marriages’ in this regard that caused serious problems and have actually undermined the success of the operation.