Two Options for Converting NPDC’s Unincorporated Joint Ventures to Incorporated Joint Ventures

By Dr. Adeoye Adefulu

In a recent article, it was announced that President Buhari had given the Nigerian Petroleum Development Company ("NPDC") the approval to corporatise its joint venture assets and convert them into Incorporated Joint Ventures (“IJV”). The IJV structure has been floated at least since 2008 when the first draft of the Petroleum Industry Bill (“PIB”) was issued. That draft of the Bill mandated the formation of IJVs with respect to joint ventures between the Nigerian National Petroleum Corporation ("NNPC") and its partners (mostly international oil companies). The IJV was seen as a solution to the perennial difficulties faced by NNPC in financing its share of the joint venture cash calls. This was based on the theory that an IJV was likely to be in a better position to raise money from loan and equity markets. This concept, loosely based on the NLNG model, was resisted by the joint venture partners for a variety of reasons and was removed from subsequent drafts of the PIB.

 The recent proposal is a bit different. Firstly, it is targeted at companies in joint ventures with NPDC, a subsidiary of NNPC. These companies are typically Nigerian owned and/or Nigerian-led companies. The assets recommended for conversion into IJV status are detailed in the table below:

Sustained Low Oil Prices: A blessing in disguise for Nigeria's Downstream Sector?

By Nkaepe Lisk-Carew 

 

Nigeria's downstream sector has always sat in stark contrast to what had always been a thriving upstream oil and gas industry. The downstream sector was very much the sick child of the Nigerian oil and gas industry, defined and plagued by chronic fuel scarcity. During such times of scarcity, the petrol stations across the country would be littered with never ending queues of cars while jerry-can carrying touts held court in the thriving black market, the price of petrol often selling at five times the going rate.

Nigeria has always focused on the upstream sector. With good reason too. It was, quite frankly, the breadwinner of the family with energy sales accounting for up to 80% of the Nigerian government's revenue and 90% of the country's export. In the first quarter of 2014 alone (obviously before the oil price plummetted), Nigeria realized N2.432 trillion in oil revenue compared to N299.2 billion realized from revenues from non-oil sector sources. This has meant that the current low oil prices has hit Nigeria hard because the government's income is not diversified. Between June 2014 and January 2015, oil prices fell by nearly 50 percent, and the oil price has remained low since then despite one or two upticks. Oil exporters are said to be receiving about 54% less than what they received in 2013.

In response to the continued low price of oil, Nigeria has had to revise its