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NNPC reduces joint venture indebtedness to $3.5bn

By Michael Eboh & Ediri Ejoh

The Nigerian National Petroleum Corporation, NNPC, yesterday said that it has reduced joint venture cash call indebtedness to international oil companies to $3.5 billion.

Group Managing Director of the NNPC, Dr Maikanti Baru

Group Managing Director of the NNPC, Dr. Maikanti Baru disclosed this in Abuja, at the 12th national conference of the Nigerian Association for Energy Economics/International Association for Energy Economics, NAEE/IAEE.

Baru said the Corporation had paid over $1.5 billion out of the $5.1 billion joint venture cash call arrears owed international oil companies adding that 2018 marked the second year without the corporation incurring any cash call arrears.

He reiterated that the corporation had negotiated the settlement of the pre-2016 Joint Venture Cash Call arrears, which led to indigenous cash exit and joint venture self-funding.

He noted that the total cash call payments so far, which represented 29.4 per cent of the total amount owed the firms, had contributed immensely in growing Nigeria’s reserves and oil output.

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He said:  “So far, we have repaid over $1.5 billion out of the $5.1 billion cash call arrears to date, a development that has not only restored the confidence of international oil companies, IOC, JV partners, but has also led to improved reserves growth and crude oil production.

“It was quite fulfilling that in 2018 — that is for the second year in a row — we concluded the fiscal year without any cash call arrears.”

Baru further disclosed that an average of 783 million Standard Cubic Feet, SCF of gas per day was flared in 2018, 2.9 per cent higher than 761 mmscfd supplied to the power sector within the same period.

He explained that in 2018, national average daily gas production stood at 7.90 billion Standard Cubic Feet, SCF, representing an increase of three per cent above 2017 average daily gas production of 7.67 billion SCF.

Gas flared outstrips quantity supplied to power firms

He said, “Of the 7.90 billion SCF per day produced in 2018, an average of 3.32 billion SCF per day (42 per cent) was supplied to the export market, 2.5 billion SCF per day (32 per cent) for re-injection/fuel gas, 1.3 billion SCF per day (16 per cent) was supplied to the domestic market and about 783 million SCF per day (10 per cent) was flared.

“Domestic gas supply capacity was marginally stable at about 1700 million SCF per day, with an average of 1.3 billion SCF per day actually supplied to the domestic market. This is due to power evacuation challenges resulting from frequency management caused by rejection of allocated load by Distribution Companies (DISCOs) as well as transmission line constraints.”

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