- Targets 700,000bpd in 2018
By Ibrahim Mohammed
The Nigeria National Petroleum Corporation (NNPC) has saved about $1.7billion for the Federal Government due to effective negotiations between the Corporation and International Oil Companies (IOCs) from the arrears of Joint Venture Cash Calls(JVCs).
DAILY ASSET investigations showed that the amount was part of about $6.8billion owed IOCs by the national oil company in Joint Venture operations in the last six years. As a result of this development, the NNPC will pay the balance of $5.1billion to the IOCs over a period of five years, a source at the Corporation’s headquarters said.
NNPC had last year signed an agreement with the IOCs to exit JVCs a development which paved way for the payment of the arrears.
The savings were achieved after a hard negotiation between officials of NNPC and representatives of the IOCs, investigations revealed.
The $5.1billion, it was learnt is different from the $1.2billion owed the IOCs in 2016 out of which NNPC recently paid $400million, leaving a balance of $800million to be paid in equal instalments over a period of one year, through the Central Bank of Nigeria(CBN).
Five oil majors which benefitted from the payment include ExxonMobil, Shell, Nigeria Agip Oil Company, Chevron and Total, the source said.
While accepting to pay the balance of the $5.1billion JVC arrears over a five-year period, the oil corporation was said to have made it clear that the amount will be paid from incremental production and not existing production.
“In other words, they will have to go and find new oil and from that new oil, we pay that money because we didn’t want to imperil the 2.2 million barrel that everybody was already used” an official quoted Minister of State for Petroleum Resources, Dr. Ibe Kachikwu to have said.
The JVC arrangement which was for many years a significant feature of the Nigerian upstream operations ran into trouble when oil revenues were remitted into the Federation Account and thereafter shared by the three tiers of government based on the revenue sharing formula without payments to the IOCs for the cost incurred to fund Joint Venture Projects.
Industrial experts said the payment of the JVC would further empower the IOCs to go into new projects thereby raising the country’s oil output to additional 700,000 barrels by 2018.
If this happens, the country’s strategic plan to raise the national crude output from 2.2mbpd to 3mbpd would be achieved in the not too distant future.
“What we cannot cover in terms of budget, the oil companies will go out to raise a loan from third parties to enable them continue more exploration and production
“We have today cumulative number of projects that are coming back which should between now and next year, give us additional 700,000 barrels over and above the 2.2million barrels per day,” said Kachikwu while commenting on the issue in a chat with newsmen at the recently concluded Offshore Technology Conference in Houston, Texas, USA.