ABUJA, (Reuters) – The new head of Nigeria’s state oil firm NNPC has pledged to press ahead with reforms that would break up the company into profit-driven units able to operate like counterparts in Brazil, Malaysia or Saudi Arabia.
Mohammed Sanusi Barkindo, a former acting OPEC secretary general who was appointed to head NNPC last week, said the reforms would create around seven new institutions better positioned to take advantage of growth in the energy sector.
“We will capitalise our operations and give financial autonomy to our subsidiaries for the development of the oil and gas sector as well as the nation,” Barkindo said in a statement issued by NNPC late on Tuesday.
He said the reforms would allow NNPC to operate in a similar way to former Brazilian oil monopoly Petrobras , Malaysia’s government-owned Petronas — which has dozens of subsidiaries — or Saudi Arabia’s state oil giant Saudi Aramco.
The restructuring will allow NNPC’s subsidiaries to raise funds by investing in the capital markets instead of relying on government revenues as they do currently, a bureaucratic process which has slowed the development of the Nigerian oil industry.
Funding shortfalls at NNPC’s joint ventures with foreign oil partners including Royal Dutch Shell (RDSa.L) and Exxon Mobil have hampered their ability to fund new projects.
“Nigeria’s expansion of its potential crude oil reserves has been stalled by the government delay in providing cash to the international oil companies for cash calls,” said Wale Tinubu, chief executive head of Nigerian energy firm Oando.
“Drilling programmes have been delayed, major expansion programmes have been delayed … The reform would only allow even more exploration and development to be done and reserves to be improved,” he told Reuters in an interview in Lagos.
If the restructuring went ahead on time, it could increase Nigeria’s production capacity to around 4 million barrels per day (bpd) by the middle of next decade from around 3 million bpd forecast by 2010, Tinubu said.
The reorganisation of NNPC is expected to lead to the sale of assets as part of measures to fund expansion, possibly including the country’s four underperforming oil refineries.
Legislation on the proposed reforms is expected to go before parliament soon. Barkindo was appointed by Nigeria’s new oil minister Rilwanu Lukman, a former OPEC secretary general who is one of the architects of the planned restructuring at NNPC.
Lukman was appointed in December as part of a cabinet reshuffle by President Umaru Yar’Adua in Africa’s leading oil producer.