• 5 hours Permian Still Holds 60-70 Billion Barrels Of Recoverable Oil
  • 10 hours Petrobras Creditors Agree To $6.22 Billion Debt Swap
  • 14 hours Cracks Emerge In OPEC-Russia Oil Output Cut Pact
  • 18 hours Iran Calls On OPEC To Sway Libya, Nigeria To Join Cut
  • 20 hours Chevron To Invest $4B In Permian Production
  • 21 hours U.S.-Backed Forces Retake Syrian Conoco Gas Plant From ISIS
  • 23 hours Iraq Says Shell May Not Quit Majnoon Oilfield
  • 3 days Nigerian Oil Output Below 1.8 Million BPD Quota
  • 4 days Colorado Landfills Contain Radioactive Substances From Oil Sector
  • 4 days Phillips 66 Partners To Buy Phillips 66 Assets In $2.4B Deal
  • 4 days Japan Court Slams Tepco With Fukushima Damages Bill
  • 4 days Oil Spills From Pipeline After Syria Army Retakes Oil Field From ISIS
  • 4 days Total Joins Chevron In Gulf Of Mexico Development
  • 4 days Goldman Chief Urges Riyadh To Get Vision 2030 Going
  • 4 days OPEC Talks End Without Recommendation On Output Cut Extension
  • 4 days Jamaican Refinery Expansion Stalls Due To Venezuela’s Financial Woes
  • 4 days India In Talks to Acquire 20 Percent Of UAE Oilfield
  • 5 days The Real Cause Of Peak Gasoline Demand
  • 5 days Hundreds Of Vertical Oil Wells Damaged By Horizontal Fracking
  • 5 days Oil Exempt In Fresh Sanctions On North Korea
  • 5 days Sudan, South Sudan Sign Deal To Boost Oil Output
  • 5 days Peruvian Villagers Shut Down 50 Oil Wells In Protest
  • 5 days Bay Area Sues Big Oil For Billions
  • 5 days Lukoil Looks To Sell Italian Refinery As Crimea Sanctions Intensify
  • 5 days Kurdistan’s Biggest Source Of Oil Funds
  • 6 days Oil Prices On Track For Largest Q3 Gain Since 2004
  • 6 days Reliance Plans To Boost Capacity Of World’s Biggest Oil Refinery
  • 6 days Saudi Aramco May Unveil Financials In Early 2018
  • 6 days Has The EIA Been Overestimating Oil Production?
  • 6 days Taiwan Cuts Off Fossil Fuels To North Korea
  • 6 days Clash In Oil-Rich South Sudan Region Kills At Least 25
  • 6 days Lebanon Passes Oil Taxation Law Ahead Of First Licensing Auction
  • 7 days India’s Oil Majors To Lift Borrowing To Cover Dividends, Capex
  • 7 days Gulf Keystone Plans Further Oil Output Increase In Kurdistan
  • 7 days Venezuela’s Crisis Deepens As Hurricane Approaches
  • 7 days Tension Rises In Oil-Rich Kurdistan
  • 7 days Petrobras To Issue $2B New Bonds, Exchange Shorter-Term Debt
  • 7 days Kuwait Faces New Oil Leak Near Ras al-Zour
  • 8 days Sonatrach Aims To Reform Algiers Energy Laws
  • 8 days Vitol Ups Cash-for-Oil Deals With Kazakhstan To $5B
U.S. Shale’s Most Productive Play May Peak By 2021

U.S. Shale’s Most Productive Play May Peak By 2021

Geological limits within the world’s…

EIA Report Kills Bullish Sentiment

EIA Report Kills Bullish Sentiment

While confidence in oil markets…

Will Nigeria Beat Corruption With This Massive Oil Company Split

The Nigerian Senate has backed plans by Oil Minister Ibe Kachikwu to split the Nigerian National Oil Company into as many as 30 independent companies. The announcement comes after a short but severe strike by unions, which pretty much paralyzed the industry for two days. Still, the question of whether 30 different companies will take better care of Nigerian oil extraction, distribution, and marketing, remains.

Kachikwu, who also heads the NNPC, announced the planned split last week as a way of dealing with corruption and inefficiency at the company, which was costing it an estimated $30 million a month. The 30 companies will be divided into five segments: downstream, upstream, gas and power, ventures, and corporate planning and services.

Related: Why Saudi Arabia Has No Intention To End The Oil Glut

Initially, the announcement caused opposition from legislators, some of whom took it to mean that Kachikwu was transforming the state company into a private one on his own, which would have been a breach of the NNPC Act that established the company in 1977. A committee hearing followed, where the minister explained the company was not being split, rather it was merely being restructured. This apparently convinced many legislators that all was legal. Some, however, maintain that Kachikwu’s actions contravene the NNPC Act, since he failed to consult the board of directors of the company.

The announcement also caused chaos among NNPC employees who went on strike Tuesday, worried that the restructuring would mean job cuts. Talks with the government followed, and the strike was called off yesterday—one more stakeholder in the matter convinced that the minister is doing the right thing.

Related: Nigerian Pipeline Bombed, Knocking Off 300,000 Barrels Per Day

Kachikwu has been gaining trust since he took the helm of the NNPC last year: the company, which was at the time in the red with a loss of around $800 million, has narrowed the loss down to $15 million as of January this year, according to the minister. He has pledged to make it profitable again—and soon—which explains the rush with the restructuring.

What’s more important, however, is that Kachikwu has vowed to review and where necessary, change production-sharing agreements plus the so-called crude oil swaps, which are a breeding ground for corruption. They are, however, not the only breeding ground for illegal practices, and substituting them with direct-sale-direct purchase agreements will be only part of what needs to be done to ensure transparency.

Related: Iran Slowly But Steadily Increasing Oil Market Share

While Kachikwu seems to maintain that splitting the company will improve accountability and transparency, the move can also be seen as actually making both these worse, as it will be much more difficult to control the separate entities and make sure they are not up to the old NNPC ways. Stronger oversight measures and a working system of controls are needed to make the good intentions work.

In other words, the problem with NNPC remains, despite the buzz created by Kachikwu’s announcement, and it is a big problem, since oil contributes over 90 percent of Nigeria’s export income and accounts for over two-thirds of the budget income.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News