23 Oct 2015 – The Nigerian government is in talks over whether it should form incorporated joint ventures with the indigenous oil and gas firms that recently gained equity stakes in four onshore blocks as a result of a divestment by Shell [LON:RDSA], Total [EPA:FP] and Nigerian Agip Oil Company, an official from the Ministry of Petroleum told Mergermarket.
The indigenous firms’ purchase of 45% the blocks concerned – OML 18, OML 24, OML 25 and OML 29 – was announced in March 2015. The Nigerian Petroleum Development Company (NPDC), a fully owned subsidiary of the Nigerian National Petroleum Corporation (NNPC) holds the remaining 55% of each block.
The blocks were initially intended to be subject to joint operational agreements between the companies and the NDPC. The new government under Muhammadu Buhari, however, has proposed that forming joint ventures with the owners of each block would be a better model.
“The reasons for this are economic, social and political. There is a lot of resentment about how the assets were transferred to the companies,” the official said. “NPDC is a state-owned company and the government feels better about having control. The oil firms may not like it but there’s nothing they can do.”
A final decision will be taken by the government before the end of the year, he added.
In each JV, NPDC will hold 55% and the indigenous firm will hold 45%, said the official.
Aiteo has acquired a stake of OML 29. Eroton Exploration & Production Company, which is a consortium of Midwest Oil and Gas and Mart Resources, gained a stake of OML 18. Newcross Exploration acquired the stake of OML 24.
There was legal wrangling over OML 25, however, when the NPDC exercised its exemption rights over Crestar’s purchase of the Shell, Total and Nigerian Agip Oil Company-owned 45% participating interest in the block. In April the Federal High Court of Nigeria ruled in favour of Crestar, freezing NNPC’s plans to acquire the stake.
Earlier this week, this news service reported that Aiteo is working with banks to restructure the debt finance it raised to buy OML 29.
by Katie McQue