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FG cuts JV cash call debts to $3.6bn



FG cuts JV cash call debts to $3.6bn

…offsets liabilities to Shell, Chevron, others



The Federal Government officially declared last weekend that it had reduced cash call debts to Joint Ventures (JVs) with Shell, Chevron and other International Oil Companies (IOCs) to $3.6 billion from $5.1 billion.
The Ministry of Petroleum Resources, which stated this in a document, noted that it had, through the Nigerian National petroleum Corporation (NNPC), offset over $1.5 billion out of the debts.
Asides the dollar payment, some N496.703 billion financial commitments were also made to the joint venture between January and September 2018.
NNPC owns 55 per cent of the JVs with Shell and 60 per cent of all the others. Private oil companies and the Federal Government through the Corporation jointly fund the JVs.
“The first tranche of $1.5 billion out of the negotiated $5.1 billion joint venture (JV) cash call debt was early paid,” the document said.
Quoting the Group Managing Director, NNPC, Dr. Maikanti Baru, the document stated that the Corporation saved $1.7 billion from its negotiation of the JV cash call debt, adding that the plan to pay it off over a five-year period would be upheld.
He said NNPC would transition from the joint venture cash call framework to self-funding incorporated joint venture (IJV) modes with its partners.
The NNPC boss also said the tiding up of the cash call issues has led to increased commitment and enthusiasm to invest in Nigeria’s oil industry as well as boosted NNPC’s credit profile internationally.
Baru explained that the average contracting cycle for upstream oil and gas operations in Nigeria has dropped to nine months from an average of 24, but that NNPC was targeting to bring it further down to six months.
NNPC also stated that the cost of producing a barrel of crude oil from oil fields in Nigeria had been slashed from $27 per barrel in 2017 to $22 per barrel.
He said while this was achieved, the 200,000 barrels per day (bd) Egina Floating Production Storage and Offloading (FPSO), which was completed and sailed away in August, achieved its first oil on December 29, 2018, indicating it could now increase its oil production as expected.
He also said Nigeria’s daily oil production recorded an upward swing of about 2.09 million barrels (mb) in 2018, translating to a nine per cent increment when compared with the 2017 average daily production of 1.86mb.
According to him, Nigeria has maintained a steady increment in crude oil production so far.
He singled out the Nigerian Petroleum Development Company (NPDC) as the major contributor to the Corporation’s reported success story in 2018, with 52 per cent daily crude oil production growth.
Baru explained that the average production from NPDC’s operated assets alone grew from an average of 108,000bd in 2017 to 165,000bd in 2018.
He described the feat as the strongest production growth within the oil industry in recent times and worth celebrating.
According to him, NPDC’s equity production share, which stood at 172,000bd, representing about eight per cent of national daily production, was impressive, and parts of initiatives his management team emplaced, among which, he noted, were the Asset Management Team (AMT) structure; strategic financing; units autonomy and security architecture framework.
The nation’s oil and gas production structure is split between JV (onshore and in shallow waters) with foreign and local firms and Production Sharing Contracts in deep water offshore.

In 2016, the IOCs operating in Nigeria agreed to give the Federal Government a discount of $1.7 billion from the $6.8 billion cash call indebtedness of NNPC to them.
The federation crude oil and gas lifting are classified into equity export and domestic, both of which are lifted and marketed by the NNPC and the proceeds remitted into the Federation Account.
The equity export receipts, after adjusting for JV cash calls, are paid directly into Federation Account domiciled in Central Bank of Nigeria (CBN).
NNPC said: “Total export receipt of $605.71 million was recorded in November 2018 as against $640.35 million in October 2018. Of the export receipts, $159.02 million was remitted to Federation Account, while $446.70 million was remitted to fund the JV cost recovery for November to guarantee current and future production.
“Total export crude oil and gas receipt for the period November 2017 to November 2018 stood at $5.91bn out of which the sum of $4.24 billion was transferred to JV cash call as the first line charge and the balance of $1.67 billion was paid into Federation Account,” NNPC stated.
From the naira proceeds got from the sale of domestic crude oil and gas from November 2017 to November 2018, a total of N569.99 billion was transferred to the JV cash call account.
The NNPC recently said it had signed two sets of alternative financing agreements with NNPC/Chevron Nigeria Limited JV and NNPC/Shell Petroleum Development Company JV on JV projects.

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1 Comment

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    February 26, 2019 at 4:12 pm

    Like!! Thank you for publishing this awesome article.

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