Nigeria's federal government may downsize its equity stakes in assets held with major joint venture partners such as Shell, Total, Chevron and ExxonMobil to less than 40% when the long-awaited oil law reform package is passed and gains presidential assent, writes Barry Morgan.

“Ambitious proposals” to sell down government stakes in joint ventures by changing the way the state meets its cash calls remains on hold as there is currently no framework in place to conduct such sales,” said Nigerian National Petroleum Corporation (NNPC) group managing director Mele Kyari. Plans envisage new “incorporated joint ventures” replacing the current model to allow them to operate as independent commercial entities, raising capital on the international markets through equity or debt and paying dividends to shareholders.

Kyari’s predecessor Maikanti Baru, widely tipped to take on the portfolio of petroleum minister, last month suggested enabling legislation may be enacted even before the end of 2019.

Most of the major joint ventures active in the Niger Delta require the NNPC to hold 60% of the equity, except Shell-led consortia where the NNPC holds just 55%.

NNPC officials are in talks to improve commercial terms with all major joint venture operators but progress has been slow while the Petroleum Industry & Governance Bill and several packages designed to overhaul the fiscal regime, revenue management and engagement with host communities remain in abeyance.

Kyari noted that the legislature is now fully controlled by President Muhammadu Buhari’s own All Progressives Congress party, “so there is better alignment and passing these laws should not now be difficult”.

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Nigeria set to divest equity stakes in assets