NNPC to consider diluting ownership in Nigerian oil blocks – source

21 Jul 16 – NNPC, the Nigerian state-owned petroleum company, will decide in the next few weeks whether it will dilute its stakes in the country’s oil fields, a government source told Mergermarket.

The move follows recommendations by the Central Bank of Nigeria and several stakeholders for the company to sell down its stakes in the assets, the source said. This is due to NNPC’s inability to meet operational costs of the oil fields, he added.

Talks regarding potential divestments and fundraising options are being held and a decision over a strategy will be made over the coming weeks, the source said.

NNPC is finally recognizing it cannot fund its share of the JVs, and production is declining as a result, a sector expert commented.

The company’s monthly financial and operations report, published online, posts an operational loss of NGN 19.43bn (USD 64.46m) in April 2016, slightly up on the NGN18.89bn loss in the previous month.

NNPC currently holds about a 55% share of the relevant oil fields. They include marginal fields, OML 18, OML 24, OML 25 and OML 29, divested by Shell last year. Around a 45% share of the oil fields was acquired by indigenous companies. The largest deal was the purchase of 45% of OML 29 for USD 2bn.

NNPC also holds assets in joint ventures with Chevron [NYSECVX], ExxonMobil [NYSE:XOM], Shell [LON:RDSA], Oando [JSE:OAO] and ConocoPhillips [NYSE:COP].

The Central Bank has not recommended the size of the stakes it believes NNPC should dilute to in these joint ventures, the source said.

The Central Bank of Nigeria and NNPC did not respond to requests for comment. 

by Katie McQue

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