• 20 hours Iraq Begins To Rebuild Largest Refinery
  • 1 day Canadian Producers Struggle To Find Transport Oil Cargo
  • 1 day Venezuela’s PDVSA Makes $539M Interest Payments On Bonds
  • 1 day China's CNPC Considers Taking Over South Pars Gas Field
  • 1 day BP To Invest $200 Million In Solar
  • 1 day Tesla Opens New Showroom In NYC
  • 1 day Petrobras CEO Hints At New Partner In Oil-Rich Campos Basin
  • 1 day Venezuela Sells Oil Refinery Stake To Cuba
  • 2 days Tesla Is “Headed For A Brick Wall”
  • 2 days Norwegian Pension Fund Set to Divest From Oil Sands and Coal Ventures
  • 2 days IEA: “2018 Might Not Be Quite So Happy For OPEC Producers”
  • 2 days Goldman Bullish On Oil Markets
  • 2 days OPEC Member Nigeria To Issue Africa’s First Sovereign Green Bond
  • 2 days Nigeria To Spend $1B Of Oil Money Fighting Boko Haram
  • 2 days Syria Aims To Begin Offshore Gas Exploration In 2019
  • 2 days Australian Watchdog Blocks BP Fuel Station Acquisition
  • 3 days Colombia Boosts Oil & Gas Investment
  • 3 days Environmentalists Rev Up Anti-Keystone XL Angst Amongst Landowners
  • 3 days Venezuelan Default Swap Bonds At 19.25 Cents On The Dollar
  • 3 days Aramco On The Hunt For IPO Global Coordinators
  • 3 days ADNOC Distribution Jumps 16% At Market Debut In UAE
  • 3 days India Feels the Pinch As Oil Prices Rise
  • 3 days Aramco Announces $40 Billion Investment Program
  • 3 days Top Insurer Axa To Exit Oil Sands
  • 4 days API Reports Huge Crude Draw
  • 4 days Venezuela “Can’t Even Write A Check For $21.5M Dollars.”
  • 4 days EIA Lowers 2018 Oil Demand Growth Estimates By 40,000 Bpd
  • 4 days Trump Set To Open Atlantic Coast To Oil, Gas Drilling
  • 4 days Norway’s Oil And Gas Investment To Drop For Fourth Consecutive Year
  • 4 days Saudis Plan To Hike Gasoline Prices By 80% In January
  • 4 days Exxon To Start Reporting On Climate Change Effect
  • 5 days US Geological Survey To Reevaluate Bakken Oil Reserves
  • 5 days Brazil Cuts Local Content Requirements to Attract Oil Investors
  • 5 days Forties Pipeline Could Remain Shuttered For Weeks
  • 5 days Desjardins Ends Energy Loan Moratorium
  • 5 days ADNOC Distribution IPO Valuation Could Be Lesson For Aramco
  • 5 days Russia May Turn To Cryptocurrencies For Oil Trade
  • 5 days Iraq-Iran Oil Swap Deal To Run For 1 Year
  • 8 days Venezuelan Crude Exports To U.S. Fall To 15-year Lows
  • 8 days Mexico Blames Brazil For Failing Auction

Breaking News:

Iraq Begins To Rebuild Largest Refinery

Goldman: These Are The Hottest Commodities In 2018

Goldman: These Are The Hottest Commodities In 2018

Investment bank Goldman Sachs remains…

Russia Aims To Challenge Qatar LNG Dominance

Russia Aims To Challenge Qatar LNG Dominance

Russia has launched a $27-billion…

Will Nigeria Beat Corruption With This Massive Oil Company Split

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