NNPC Clears JV Cash Call Debts by April 2018
• Estimates $30bn revenue from four upstream investments
• Completes repair of sabotaged trans Niger line
• Raises oil output by 150,000bpd
Chineme Okafor in Abuja
The Nigerian National Petroleum Corporation (NNPC) has indicated that it will clear its cash call debts to its Joint Venture (JV) partners in oil production before the anniversary of the first $400 million payment it made to them in April this year.
NNPC’s Group Managing Director, Dr. Maikanti Baru, disclosed this in a statement from the Group General Manager, Public Affairs of the corporation, Mr. Ndu Ughamadu, on Monday in Abuja.
Baru also said at the inauguration of the reconstituted NNPC Anti-Corruption Committee, that the four upstream investments it recently entered into with its JV partners would provide incremental revenue worth $30 billion to the national treasury in the next 10 years.
The NNPC in December 2016 got a discount of $1.7 billion from the $6.8 billion it owed its JV partners as cash call obligations and was asked to pay $5.1 billion instead. This is however in addition to the $1.2 billion cash call debt owed the partners in 2016, for which $400 million was paid in April.
Baru, however, explained in the statement that the NNPC would seek to balance the outstanding debts before April 2018.
He said: “These four projects alone are going to raise incremental revenues to Nigeria of over $30 billion over the life of the projects in less than 10 years. They will also serve as part of the vehicle for exiting JV cash calls.
“We have to pay our arrears of about $6 billion that were incurred pre-2016 and we are also paying up a tranche of about $1 billion 2016 arrears. We started in April 2017 with the payment of $400 million and we will pay the balance before the anniversary of the first payment.”
According to him, the upstream investments which the corporation signed with multiple partners attracted about $3.8 billion in foreign direct investments to it.
He said this would serve as the means to fast-track its exit from the cash call era of funding oil and gas production in the country.
Baru listed the signed alternative financing arrangements to include the $1.2 billion multi-year drilling for 36 offshore and onshore oil wells under the NNPC/Chevron Nigeria Limited JV which is codenamed project Cheetah; and the $800 million NNPC and First E&P JV and Schlumberger tripartite alternative funding agreement for the development of the Anyalu and Madu fields in the Niger Delta.
He also said the $1 billion NNPC/SPDC JV Project Santolina; and the $780 million NNPC/Chevron JV Project Falcon on Sonam were the other two.
He commended the finance and technical teams of the corporation for attracting the investments at a period, which he said was difficult to attract foreign credit facilities.
He also explained that the arrangement would allow the corporation to subsequently operate from the production revenue less the first line charge to the government which is the royalties and petroleum profit tax.
According to him, whatever profit that accrues afterward would be remitted to the government after deduction of production cost.
Drawing a correlation between the quest for revenue and the federal government’s anti-corruption campaign, Baru said the corporation’s staff must never allow corrupt practices to distract them from their tasks.
He said the NNPC was the first government agency in 2000 to get involved in government’s anti-corruption campaign when the government mandated all its Ministries, Departments and Agencies (MDAs) to establish in-house anti-corruption committees.
“NNPC was the first to put one in place within a month, precisely on October 2000,” he noted, while stating that the committee had consistently carried out its mission of eradicating corruption in the NNPC by organising sensitisation campaigns; workshops; seminars; and government’s publications on issues concerning corruption and economic crimes.
He equally emphasised that with the prevailing global economic reality, the only survival strategy for the NNPC was to change from its old ways of doing business and embrace the best practice of transparency, accountability, and honesty with integrity.
The statement said the reconstituted anti-corruption committee of the corporation would be headed by Mr. Mike Balami, a Group General Manager in the Finance and Account Directorate.
Meanwhile, Nigeria’s daily oil production is expected to rise again by 150,000 barrels per day (bpd) following indications that the Trans Niger Pipeline (TNP), which was broken by unidentified hoodlums some weeks ago, had been repaired and currently undergoing some technical tests.
The sabotage on the line, according to Baru, had cut Nigeria’s oil production by 150,000bpd.
However, THISDAY on Monday gathered from the NNPC that the broken parts of the line which crisscrossed the Ogala, Alakiri, Cawthorne Channel, and Bonny areas of the Niger Delta, transporting around 180,000bpd to the Bonny export terminal had been fixed by a team of engineers.
Baru had on July 24 disclosed on the sidelines of the extraordinary session of the council of ministers of the African Petroleum Producers Organisation (APPO) held in Abuja, that a fresh militant attack on the Trans-Niger crude oil pipeline was recorded in the early hours of that day.
“Unfortunately, we have not been able to sustain it (oil production) because we get challenges. As I am talking to you, this morning, the Trans-Niger pipeline has been breached in Ogoniland, and that is 150,000 barrels of oil that have been knocked off. That has been fairly an issue with that area,” said Baru when he was asked about Nigeria’s oil production then.
He also stated: “We hope we can continue our dialogue and this would return to what it should be.”
But Ughamadu confirmed to THISDAY that repair of the line had been completed and undergoing a test-run.
“It has been put back, and so they are test-running at the moment. It will resume production any moment from now,” Ughamadu explained.
The TNP is 30 per cent owned by Shell Petroleum Development Company (SPDC), the NNPC which has 55 per cent shares of it, Total E&P Nigeria Ltd – 10 per cent, and Nigerian Agip Oil Company (NAOC) – 5 per cent, and is part of the gas liquids evacuation infrastructure critical for continued domestic power generation (Afam VI power plant) and liquefied gas exports.
Also, as a result of militancy in the Niger Delta region, which resumed in 2015, Nigeria suffered a huge drop in her oil production and was exempted by the Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC members from participating in a freeze arrangement to stabilise prices of oil. But the country recently submitted a plan to the coalition to participate in the arrangement at a production cap of 1.8mbpd.