By Adewole Kehinde
I came across an article published by the “Editorial Board of Africa Oil+Gas Report” titled “NNPC’s Grab and Grab Will Demarket the Nigerian Hydrocarbon Opportunity.”
Indications from the body of the article show that some enemies of the NNPC Limited are behind the write-up to tarnish the image of the Nigerian National Petroleum Company Limited.
For the purpose of clarification, the Petroleum Industry Act establishes incorporated joint companies under Section 65 of the Act. The NNPC Limited is to conduct its affairs on a commercial basis in a profitable manner without recourse to government funds and their memorandum and articles of association shall state these restrictions.
The NNPC is also required to declare dividends to its shareholders and retain 20% of profit as retained earnings to grow its business like any other incorporated entity incorporated under the Companies and Allied Matters Act, as provided under Section 53(7) of the Petroleum Industry Act.
With the above, the NNPC Limited has a right of pre-emption on all its Joint Venture Contractors (JVCs).
Also the NNPC Limited supervises the mechanism of funding the Joint Venture Operations through the Cash-Call Process.
From my available information, NNPC Limited current Joint Venture Partners are:
- Shell Production & Development Company (SPDC) – NNPC 55% / SHELL 30% / ELF 10% / AGIP 5%.
- Mobil Producing Nigeria Unlimited (MPNU) – NNPC 60% / MPN 40%
- Pan Ocean Oil Corporation Nigeria (POOCN) – NNPC 60% / POOCN 40%
- Chevron Nigeria Ltd (CNL) – NNPC 60% / CNL 40%
- Nigeria Agip Oil Company (NAOC) – NNPC 60% / NAOC 20% / OANDO 20%
- Total Exploration & Production Nigeria (TEPNG) – NNPC 60% / TEPNG 40%
- First Exploration & Production Ltd (FEPL) – NNPC 60% / FEPL 40%
- West African Exploration & Production (WAEP) – NNPC 55% / WAEP 45%
- Seplat Petroleum Development Company Plc (SEPLAT) – NNPC 60% / SEPLAT 40%
- Nigeria Petroleum Development Company (NPDC) –
- Amni International Petroleum Development Company Ltd (Amni) – NNPC 60% / AMNI 40%
- Newcross Exploration & Production Company Ltd (NEPL) – NNPC 55% / NEPL 45%
- Aiteo Eastern Exploration & Production Company Ltd (AITEO) – NNPC 55% / AITEO 45%
- Eroton Exploration & Production Ltd (Eroton) – NNPC 55% / EROTON 45%
- Belema Oil Producing Ltd (Belema) – NNPC 60% / BELEMA 40%
Now let me make it clear to my readers what pre-emption is all about.
It is the purchase of goods or shares by one person or party before the opportunity is offered to others.
The purpose of pre-emption rights is to give current shareholders the opportunity to protect their stake in the company from becoming diluted if more shares are issued.
So from my understanding, NNPC was exercising its right of pre-emption on the ongoing divestment of ExxonMobil JV assets so as to protect its stake in the company from becoming diluted if more shares are issued.
NNPC as Limited company is operating on commercial basis and bound to make profit like every other commercial ventures, I don’t see anything bad in a commercial business that is targeting to make profit “to grab and grab” since the Law has permitted them to make profit under Section 53(7) of the Petroleum Industry Act.
For the information of the sponsors of the article, the Petroleum Industry Act has opened ways for investors to take interest in the Oil and Gas sector in Nigeria.
The article raised the issue of Nationalization and assumed that investors around the world will mark Nigeria as a no-go area. NNPC Limited like I have said is a commercial entity and can pick interest in other oil and gas companies.
The good news is that the pre-emption will help to check exploitation; ensures steady supply of services; encourages efficient use of resources; protection of strategic oil and gas industries; ensures equitable distribution of resources; elimination of Monopoly and help in mobilisation of capital.
On a final note, the Nigerian National Petroleum Company Limited is not ready to take over the entire concession map but in business to make profit and run the company in a transparent manner.
Adewole Kehinde is the Publisher of Swift Reporters and can be reached via 08166240846, 08123608662
