By Abimola Fashakin, Lagos
The Nigerian National Petroleum Company (NNPC) has signed an agreement to exit from the Joint Venture Cash Call (JVC) with some international oil companies operating in the country.
The agreement was signed in Abuja on Friday at the Ministry of Petroleum Resources between the Federal Government and Shell, Chevron, Agip, Total, Oando.
Nigeria owes an estimated $ 6.8 billion to the oil prospecting companies, which has accumulated over 14 years but got a discount of $1.7 billion, leaving a debt of $5.1 billion to be repaid.
The Minister had, at another forum, explained that the agreement stated that the payment from incremental oil production would not affect Nigeria’s budget production benchmark of 2.2 million barrels per day (mbpd).
The Minister of State for Petroleum, Dr Ibe Kachikwu who signed on behalf of the Federal Government, expressed joy that the signage would bring more investments into the country.
He said lots of work and political determination had gone into the nation’s exit from the JVC debt, saying ”If we continue to focus on things that haven’t worked in a long while, we’ll get this industry on its way to competing favorably with other counterparts.
”I challenge the oil companies to put their monies where their mouth is because they said once this is done investments would begin to come into the country. I must also appreciate President Muhammadu Buhari for supporting the effort and for his willingness to steer the cause.”
The Group Managing Director of NNPC, Dr Maikanti Baru said the agreement was aimed at addressing long standing issues of unpaid cash call arrears, under-funding the joint venture and the burden of monthly payments by the Federal Government.
He said inability of the NNPC to regain technical costs had been a major reason for the accumulation of the arrears over time.
Baru said under the new funding model, government would continue to receive royalties, taxes and profit from its equity share of Joint Venture oil and gas production.
He said signing of the agreement would restore investor confidence and provide opportunity for NNPC and joint venture partners to easily raise capital to finance oil and gas operations.
Mr Clay Meff, the Chairman of the Oil Producers Traders Section (OPTS), lauded the minister for making the resolve his top priority.
”It’s a landmark, milestone, a positive step. JVC will increase investor confidence and increase investment in the future. Repayment is key enabler to additional investments in the future. If we focus and work together there’s no issue that we can’t tackle as stakeholders involved.”
NNPC, sign agreement to end JVC oil multinationals
By Abimola Fashakin, Lagos