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NNPC Begins Payment of Negotiated $5.1bn JV Cash Call Debt

The Nigerian National Petroleum Corporation (NNPC) has so far paid $1.5 billion out of the negotiated $5.1 billion joint venture (JV) cash call debt it owes International Oil Companies (IOCs) operating in Nigeria.

The corporation’s Group Managing Director, Dr. Maikanti Baru, made the disclosure according to a statement issued issued by the Group General Manager, Public Affairs, Mr. Ndu Ughamadu, in Abuja.

NNPC also stated that the cost of producing a barrel of crude oil from oil fields in Nigeria has been cut down from $27 per barrel in 2017 to $22.

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.

Baru was quoted to have said these in a comprehensive end of year message to staff of the corporation.

He also said Nigeria’s daily oil production recorded an upward swing of about 2.09 million barrels (mb) in 2018, translating to a 9 per cent increment when compared with the 2017 average daily production of 1.86mb.

He explained 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.

According to him, the NNPC would transition from the joint venture cash call framework to self-funding incorporated joint venture (IJV) modes with its partners.

He 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 come down to nine months from an average of 24, but that NNPC was targeting to bring it further down to six months.

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, in the end-of-year statement, 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 Tea (AMT) structure; strategic financing; units autonomy and security architecture framework.

Baru revealed that in the frontier basins, NNPC has intensified exploration activities in the Benue Trough, with the expected spudding of Kolmani River Well 2 in January.

He explained that activities would resume in the Chad Basin as soon as the security situation improves in the region.

In the midstream, he stated that in 2018, Nigeria achieved an average national daily gas production of 7.90 billion standard cubic feet (bscf), translating to three per cent above the 2017 average daily gas production of 7.67bscf.

He said out of the 7.90bscf produced in 2018, an average of 3.32bscfd (42 per cent) was supplied to the export market; 2.5bscfd (32 per cent) for re-injection/fuel gas; 1.3bscfd (16 per cent) was supplied to the domestic market; and about 783 million standard cubic feet per day (mmscfd) (10 per cent) was flared.

He stated that out of the 1.3bscfd supplied to the domestic market, an average of 71mmscfd went to the power sector, while 470mmscfd was supplied to the industries and the balance of 69mmscf delivered to the West African market through the West African Gas Pipeline (WAGP).

NNPC, he noted, would bridge the medium-term domestic gas supply deficit by 2020 through its seven Critical Gas Development Projects (CGDPS). He said a reputable project management consulting firm was collaborating with an NNPC team to achieve accelerated implementation of the projects.

He assured Nigerians that the full implementation of the project would boost domestic gas supply from about 1.5bscfd to 5bscfd by 2020, with a corresponding 500 per cent increase in power generation and stimulation of gas-based industrialisation.

Baru explained that all existing power plants in the country now have a permanent gas supply pipeline infrastructure, even as he stressed that the corporation would continue to expand and integrate its gas pipeline network system to meet increasing domestic gas demand.

In the midstream refinery sub-sector, Baru said he regretted that the country’s three refineries had not undergone Turn Around Maintenance (TAM) for an aggregate of 42 years combined.

He said despite the challenge, major rehabilitation works were carried out in all the three refineries.

He noted that Warri refinery had its Distribution Control System (DCS) successfully upgraded; Port Harcourt refinery had major interventions in its Fluid Catalytic Cracking Unit (FCCU) and Power Plant Unit (PPU), while the Kaduna refinery was undergoing major repairs of its FCCU, Catalytic Reforming Unit (CRU) and Crude Distillation Unit 2 (CDU2).

Efforts, he said, are ongoing to get the original builders of the refineries to carry out TAM on them after securing favourable private funding for the exercise.