Nigeria's new oil minister wants to reduce the government's stake in its joint venture oil business with foreign companies in a bid to spur more foreign investment in Africa's largest oil producer.
Minister of State for Petroleum Timipre Sylva said in a statement Sunday that reducing the government's stake to 40% from 55%-60% was one of his main priorities.
Sylva, appointed last month by President Muhammadu Buhari, also said that curtailing the country's production costs by at least 5% and growing its oil output to 3 million b/d remained on top of his agenda.
Nigeria produces a little over around 2 million b/d of oil, including condensates.
The OPEC member country owns a 55% stake in its joint venture with Royal Dutch Shell, and 60% interest in other oil majors including Chevron, Eni, ExxonMobil and Total. The ventures account for around 90% of Nigerian oil output.
Nigeria's oil output has risen almost 10% this year due to the start-up of the 205,000 b/d Egina field.
But funding challenges, delay in implementing reforms and sabotage of production facilities in the past decade have meant that output has never been more than 2.20 million b/d Sylva also said he will promote the passage of the landmark oil reform legislation, the Petroleum Industry Governance Bill and he hopes to pursing exploration programs in deep offshore and inland basins.
Another key objective is to collaborate with "the private sector to aggressively increase domestic refining capacity; and the completion of the Nigerian gas flare out program," he said.
MUCH NEEDED REFORM
Industry analysts said Monday that lofty as the minister's targets were, the government needed to muster enough political will to implement the programs.
"Reducing the JV asset to 40% is an innovation that is long overdue. The Nigerian government becoming a minority stake holder will not be a bad idea as it will open up chances for majors to pump funds needed for exploration and production," an official at a Western oil company said.
"We have heard from four ministers and past NNPC chief executives about plants to raise production to 3 million b/d, however, sadly not much investments are channeled towards achieving this," energy analyst Wunmi Iledare said.
"Production from JV assets are declining fast with no new assets added over the past years. Going from today's 2 million b/d to 3 million b/d may be hard under the current climate of uncertainty in reform," Iledare said.
