Nigeria Sets To Sell 20% of Oil Assets To Fund 2019 Budget

Nigeria plans to sell 20 percent of its stake in petroleum joint venture as part of measures to reduce the burden of sourcing for finance to fund its portion of the joint venture while raising money to fund its 2019 budget.

Africa's biggest oil producer currently maintain a 60 percent stake in joint oil venture with some International Oil companies (IOCs).
In a document released by the government on Tuesday, Nigeria will reduce all shares in joint venture oil assets to 40 percent in the 2019 fiscal year.
Apart from Royal Dutch Shell that has 45/55 percent shares its joint venture with Nigeria, others maintain 40/60 percent ratio stakes in the joint venture partnership.
Other oil majors oil firms in joint venture partnership Nigeria including Chevron and ExxonMobil, while the state-run oil firm Nigerian National Petroleum Corporation (NNPC) hold Nigeria shares on behalf of the country.
As part of measure to fund this year's budget, the government of President Mohammadu Buhari has proposed to reduce all joints venture assets to raise money to fund infrastructure development in the country and offsets budget deficits.
Two years ago, the government had proposed to restructure its equity in the JV oil assets and said the proceeds would be reinvested in other assets.
However, over the years the plans did not materialise due to political pressure from various interest group who are opposed to the move by the government.
Nigeria’s relationship with its energy partners has been fraught for decades, with the government struggling to pay for its share of oil production costs.
The government has maintained, too, that existing contracts are unfair to the state and have called for improved terms.
The state has also pushed regulators to collect back taxes owed by international oil companies. “Nigeria is looking for money but selling assets under pressure isn’t really the best way to get value for money Cheta Nwanze, head of research at Lagos-based consultancy SBM Intelligence said.
He said that selling their oil stakes would be complicated and wondered whether the government would be able to follow through with its pledge.
Gail Anderson at energy consultancy WoodMackenzie said as the state already received 90 percent of the sale of each barrel produced in taxes and royalties, the move to reduce the government share of each venture would only alleviate the burden of initial operating costs.