Nigeria bids to build global oil group
Monday, 10 September 2007
Matthew Green and Dino Mahtani
NIGERIA has announced plans to transform its near-bankrupt state-owned oil company into a global player.
The aim is to break a legacy of corruption and mismanagement and thrust the business into the ranks of increasingly influential national energy companies.
Analysts say the Nigerian National Petroleum Corporation (NNPC), a majority partner in the country's joint ventures with established multinationals, has long served as a reservoir of cash feeding Nigeria's venal political system.
But the last month, the government of Umaru Yar'Adua, Nigeria's new president, said it would break the company into several units as part of plans to define responsibilities, increase public scrutiny and seek private finance sources. The idea is to turn NNPC's amorphous structure of regulatory and business arms into a company that could tap international markets, acquire assets and assert more control over the nation's vast oil reserves.
Officials have made comparisons between the future Nigerian entity and companies such as Russia's Gazprom and Brazil's Petrobrás, which are at the forefront of the trend of national concerns challenging the dominance of the leading international oil companies. "We see ourselves competing with the other national oil companies which have left us so far behind," said Levi Ajuonuma, an NNPC spokesman. "We haven't grown as we should have, but it's better late than never."
The future National Petroleum Company of Nigeria (Napcon) will sit alongside new industry bodies, including independent regulators, a downstream organisation and an assets holding company. Napcon's finances will be separated from the state's, and the company will manage its own funding - a change analysts say will encourage greater transparency.
Jackson Gaius-Obaseki, a former head of NNPC, said the restructuring amounted to a salvaging exercise for a company on the point of collapse. "The capability [of NNPC] to hold together no longer exists," he said.
The company, which has a 1.4m barrels a day share of Nigeria's overall production, has been drained by government subsidies on imported petrol and years of abuse by political rulers, say analysts.
In July, Mr Yar'Adua told the FT he wanted to foster greater NNPC accountability . His predecessor, Olusegun Obasanjo, promised change but delivered little.
The company wants to complete the reforms in six months, but an entrenched network of vested interests - from contractors to bureaucrats who benefit from the status quo - may get in the way. "A lot will depend on those who are appointed," said Mr Gaius-Obaseki
The reforms also aim to strengthen Nigeria's hand in dealing with international oil companies operating in the country, particularly as production contracts signed away cheaply during military rule in the 1990s are coming up for review. The contracts cover some of the biggest multinational oil investments in the country.
The changes could also allow Nigeria to develop gas reserves for use in its chronically underdeveloped power sector, as opposed to remaining focused purely on export.
........................................
FT Syndication Service
NIGERIA has announced plans to transform its near-bankrupt state-owned oil company into a global player.
The aim is to break a legacy of corruption and mismanagement and thrust the business into the ranks of increasingly influential national energy companies.
Analysts say the Nigerian National Petroleum Corporation (NNPC), a majority partner in the country's joint ventures with established multinationals, has long served as a reservoir of cash feeding Nigeria's venal political system.
But the last month, the government of Umaru Yar'Adua, Nigeria's new president, said it would break the company into several units as part of plans to define responsibilities, increase public scrutiny and seek private finance sources. The idea is to turn NNPC's amorphous structure of regulatory and business arms into a company that could tap international markets, acquire assets and assert more control over the nation's vast oil reserves.
Officials have made comparisons between the future Nigerian entity and companies such as Russia's Gazprom and Brazil's Petrobrás, which are at the forefront of the trend of national concerns challenging the dominance of the leading international oil companies. "We see ourselves competing with the other national oil companies which have left us so far behind," said Levi Ajuonuma, an NNPC spokesman. "We haven't grown as we should have, but it's better late than never."
The future National Petroleum Company of Nigeria (Napcon) will sit alongside new industry bodies, including independent regulators, a downstream organisation and an assets holding company. Napcon's finances will be separated from the state's, and the company will manage its own funding - a change analysts say will encourage greater transparency.
Jackson Gaius-Obaseki, a former head of NNPC, said the restructuring amounted to a salvaging exercise for a company on the point of collapse. "The capability [of NNPC] to hold together no longer exists," he said.
The company, which has a 1.4m barrels a day share of Nigeria's overall production, has been drained by government subsidies on imported petrol and years of abuse by political rulers, say analysts.
In July, Mr Yar'Adua told the FT he wanted to foster greater NNPC accountability . His predecessor, Olusegun Obasanjo, promised change but delivered little.
The company wants to complete the reforms in six months, but an entrenched network of vested interests - from contractors to bureaucrats who benefit from the status quo - may get in the way. "A lot will depend on those who are appointed," said Mr Gaius-Obaseki
The reforms also aim to strengthen Nigeria's hand in dealing with international oil companies operating in the country, particularly as production contracts signed away cheaply during military rule in the 1990s are coming up for review. The contracts cover some of the biggest multinational oil investments in the country.
The changes could also allow Nigeria to develop gas reserves for use in its chronically underdeveloped power sector, as opposed to remaining focused purely on export.
........................................
FT Syndication Service