LAGOS, NOVEMBER 14, 2016 – The federal government plans to list the Nigerian National Petroleum Corporation (NNPC) on the Nigerian Stock Exchange, once it concludes its reforms of the country’s petroleum sector, the latest draft national oil policy has revealed.
In the Draft National Oil Policy 2016, released alongside the Draft National Policy on Gas, three sectors in Nigeria’s economy – power, transportation, and industries – will be the key drivers of its new policy on gas.
According to the draft oil policy, a newly formed corporation could sell stakes so long as the government shareholder retains effective control and ownership.
It, however, pointed out that the government’s reform of the industry would see NNPC function more as a private entity with less of official bureaucracies.
Both policies obtained by THISDAY are still being worked on by the ministry and they have also been shared with key industry stakeholders for their comments and reviews.
The draft oil policy stated: “The NNPC will be made autonomous from the state, it will relinquish all its policy making and regulatory activities, and it will be treated on an equal basis with private sector operators for projects.”
“Under the Petroleum Policy, NNPC will be made autonomous from the state, it will relinquish all its policy making and regulatory activities, and it will be treated on an equal basis with private sector operators for projects.
“NNPC will also be restructured into five autonomous profit centre subsidiaries so that the value of separate activities can be realised and operational efficiencies can be introduced,” added the draft policy.
Besides, the document noted: “NNPC will be restructured such that it is fully set up as a Corporation (Limited Liability Company), in accordance with standard international practice for Corporations, including operating under commercial law and a two tier board structure.
“The NNPC restructuring will mean that policy making will become the sole preserve of the MPR (ministry of petroleum resources), all regulatory activities will become the sole preserve of the new single petroleum regulatory agency under the oversight of the MPR, NNPC will be responsible for managing the national interests in the JVs, PSCs and in other upstream, midstream and downstream projects where the government is involved as an investor, full corporatisation and restructuring of NNPC.
“The corporatisation and restructuring of NNPC will involve; separating NNPC into five independent autonomous units (profit centre subsidiaries) which will be operationally independent, self-accounting and will hold funds in their own right, the creation of a new parent holding company to be called the National Oil Company of Nigeria (NOCN).
“NNPC will cease to exist as a statutory corporation and as a legal entity and will be succeeded by NOCN. NOCN will be incorporated as a limited liability company, NOCN will be governed according to the governance rules of the Nigerian Stock Exchange prior to the listing of its shares, and by the rules of any bourse where its shares are eventually listed.”
On gas, the draft gas policy document said the government would be hoping to drive gas development through improved electricity generation, transportation of people and goods using gas as fuel, as well as energise industries in the country.
The two documents, which were released by the ministry of petroleum resources in Abuja, stated the government’s intention for oil and gas in the country, adding that gas would be treated as a stand-alone resource from oil.
“The previous gas policy has not succeeded. In addition, the world is now a very different place from when the Gas Master Plan was put in place. The international gas business environment is much less benign for exporters than it was, finance is much less available (from government or from international investors), and there are significant challenges now facing Nigeria,” said the gas document.
It explained: “Rather than trying to continue with a centrally planned national market development, the gas policy proposes a project-based and market opportunity-led approach as a more effective way to grow gas markets.
“Appropriate frameworks will be developed to support gas based projects, including gas transport pipelines and associated anchor customers or demand clusters.”
It said projects would largely be developed by project developers from the private sector, while the government will set the environment and support investors in gas-based industrial projects with appropriate interventions to bring their projects to fruition.
On Liquefied Natural Gas (LNG), the document stated: “The intention is for Nigeria to retain ownership of its national natural gas up to the point of delivery into markets.
“The government therefore intends to move to a tolling arrangement with respect to LNG exports, whereby the LNG liquefaction facility is paid a fee for liquefying the government share of gas produced from its assets, and LNG shippers are paid a transportation fee for transporting it.
“Ownership and title to the gas therefore remains with the government entity up to the point where it is regasified at the export market regasification terminal and sold to shippers.”
The document emphasised that gas development must be undertaken in accordance with Nigeria’s national socio-economic development priorities, adding that the government through the ministry and with support from NNPC and industry will produce a Gas Resource Management Plan.
The Gas Resource Management Plan, it said, would identify gas resources in different geological areas, identify current and potential gas markets, identify infrastructure needs, and analyse how best to access low cost gas for delivery to domestic gas markets.
The document also said that the Gas Resource Management Plan would classify gas resources according to the following categories, low cost assets dedicated for domestic gas supply (National Preferential Assets), assets dedicated for export, National Strategic Gas Reserve (reserved for future development) and optional assets (sole risk assets).