The
Nigerian Government is looking to raise revenue this year from the sale of some
of its stakes in joint venture oil assets and the review of Production Sharing
Contracts with private firms, mostly international oil companies operating in
the country. This is according to information contained in the 2019 approved
budget public presentation which revealed that the Nigerian President –
Muhammadu Buhari, had directed that immediate action be commenced to
restructure the JV oil assets “so as to reduce government shareholding to not
less than 40 per cent and that this exercise must be completed within the 2019
fiscal year.”

The
nation’s oil and gas production structure is majorly split between JV onshore
and in shallow water with foreign and local companies and PSC in deepwater
offshore, to which many IOCs have shifted their focus in recent years. The
Nigerian National Petroleum Corporation owns 55 per cent stake in its JV with
Shell and 60 per cent stakes with others, including Chevron and ExxonMobil.

Under
the JV arrangement, both the NNPC and private operators contribute to the
funding of operations in the proportion of their equity holdings and generally
receive the produced crude oil in the same ratio. While under the PSCs, the
NNPC holds the concessions, and the contractors fund the development of the
deepwater offshore blocks and recover their costs from the production after
royalty payments.

It
also bears noting that militancy in the Niger Delta has generally abated, resulting
in increased production from an average of 1.91 million barrels per day in the
fourth quarter of 2018 to an average of 1.96mbpd in Q1 2019.