• Seplat, Oando may welcome new partners

Sopuruchi Onwuka

The ongoing plans by the Nigeria’s national oil company, NNPC Limited, to divest significant equity in several oil blocks in early 2026 as part of an overall strategy proposition developed by leading indigenous technocrats to enable the current administration of the federal government raise about $17 billion in immediate cash and attract fresh capital to boost oilfield development and production.

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The reform document which has reshaped Nigeria’s petroleum industry over the past two years can be traced largely to a policy report authored by technocrats within the Indigenous Petroleum Producers Group (IPPG), a document that has since become the informal playbook for the administration of President Bola Tinubu.

The report, developed by leading industry professionals including geologists and Seplat Energy’s pioneer managing director, Austin Avuru, called for a fundamental restructuring of the national oil company.

Key recommendations included reducing NNPC Limited’s equity in joint ventures to minority positions, cutting back government ownership of refineries, liberalising the downstream fuel market, and placing the leadership of NNPC in the hands of proven private-sector professionals.

Since President Tinubu assumed office in 2023, many of these proposals have been translated into policy. They have underpinned leadership changes at NNPC Limited, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), as well as the deregulation of the domestic fuel market to ease the subsidy burden on government.

One of the most significant recommendations now nearing execution is the divestment of NNPC’s equity in existing joint ventures. Industry sources told Oracle Intelligence that NNPC plans to begin the sale of several oil blocks in early 2026, targeting about $17 billion in immediate cash proceeds while attracting fresh capital to revive oilfield development and boost production.

Under the proposed structure, NNPC, which typically holds a 60 percent interest in its joint ventures, would sell down as much as 35 percent of its stakes in at least 14 JVs. The assets include fields operated by indigenous producers such as Seplat Energy and Oando, although there are no indications that operatorship of the assets will change.

And if the imminent divestments are to be on asset-by-asset basis, then prevailing JV operators with multiple oil blocks might have multiple new partners under new strategic business units with separate partnership agreements.

Sources said presidential approval has been secured for the divestment programme, and a financial institution has been engaged to structure the transactions. The buyers are expected to include a mix of established operators and newer entrants to the upstream sector.

Beyond the immediate cash inflow, the IPPG report argued that reducing NNPC’s dominance in joint ventures would unlock long-term value by improving capital discipline, accelerating project execution, and reversing Nigeria’s production decline. The strategy aligns with broader national targets of raising oil reserves to 40 billion barrels and lifting average daily output to 4 million barrels within the next five years.

The report also identified crude oil allocation to NNPC’s refineries as a major leakage point in government revenues. It recommended that crude previously assigned to the country’s 445,000 barrels-per-day refining capacity be sold on the open market instead, a move aimed at easing liquidity pressures in the foreign exchange market. This thinking formed the basis for downstream deregulation and a shift away from subsidy-driven fuel pricing.

In addition, the document laid the groundwork for revisions to fiscal terms governing deepwater developments and gas commercialisation. These changes have since triggered a new wave of field development plans and investment decisions, particularly for greenfield projects across the upstream and gas sectors.

While plans to reduce government equity in joint ventures have circulated for years, implementation has often lagged. That appears to be changing as weak performance under the 2025 fiscal framework and a return to large budget deficits increase pressure on NNPC to generate cash and support government revenues.

The Tinubu administration has struggled to rebuild oil production above 2.5 million barrels per day, from lows of less than one million barrels per day at the start of the administration. Although the 2025 budget projected output of 2.06 million barrels per day, actual production peaked at about 1.8 million barrels per day, leaving a significant fiscal gap that was bridged through increased borrowing.

To strengthen the petroleum sector’s contribution to government revenues, NNPC is also advancing plans to bring in new partners through farm-out arrangements. Following initial reports by Africa Intelligence in November, negotiations have intensified over limited-interest farm-outs in several oil mining leases, including OMLs 11, 13, 64, 66, 70, 98, 119, 123, 124, 126, and 137.

Companies linked to the discussions include Tullow Oil, Petralon Energy, Bono Energy, Metropole Energy Resources, Pasadena Resources, Geoplex, Dutchford E&P, and Paragon Holdings.