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NNPC offsets $1.5bn of its cash call debts to oil companies
GROUP managing director of the Nigerian National Petroleum Corporation, NNPC, Baru Maikanti on Tuesday at the National Association for Energy Economics, NAEE, International Conference held in Abuja revealed that efforts to pay off debts owed to foreign oil partners have boosted oil exploration and production activities in the country.
In his statement, he clarified the state of the nation’s cash calls debt to the International Oil Companies, IOC, doing business in the country.
“So far, we have repaid over $1.5 billion out of the $5.1 billion cash call arrears to date, This has not only restored the confidence of international oil companies and our joint venture partners but has also led to improved reserves growth and crude oil production,” he said.
A Reuters report showed that Nigeria owed its foreign partner companies about $5.1 billion in counterpart funding also known as “cash calls” debts which go back as 2016, compelling the government to renegotiate the debts and adopt a new funding mechanism for upstream ventures by late 2016.
According to Baru, Nigerian oil production has also been bolstered after NNPC was able to reduce the contracting cycle for upstream operations from 24 months to nine months, “with a strong commitment to further reduce the process to less than six months in the months ahead.”
The Nigerian government, through the NNPC, retains ownership stake of over 57 per cent equity in joint ventures with international oil companies including Shell, ExxonMobil, Chevron, Total and Eni. These multinational oil firms account for between 85 to 90 per cent of Nigeria’s 2 million barrels per day of oil production, including condensate a form of natural gas.
He stated, that in 2018 the national average daily gas production stood at 7.90bn Standard Cubic Feet, SCF, representing an increase of three per cent above 2017 average daily gas production of 7.67bn SCF.
“Of the 7.9bn SCF per day produced in 2018, an average of 3.32bn SCF per day (42 per cent) was supplied to the export market, 2.5bn SCF per day (32 per cent) for re-injection/fuel gas, 1.3bn SCF per day (16 per cent) was supplied to the domestic market and about 783 million SCF per day (10 per cent) was flared,” he said.
Nigerian oil output including condensates reportedly has recovered to nearly 2 million barrels per day this year after receiving a timely boost with the startup of the offshore 200,000 barrels per day in Egina Field. The country targets 2.3 million barrels per day in 2019.