Out of about $4.6 billion negotiated joint venture (JV) oil production debt Nigeria was owing international oil companies (IOCs), about $3.02 billion has been paid by the Nigerian National Petroleum Corporation (NNPC), leaving about $1.58 billion as the outstanding, a report by the corporation has disclosed.
The NNPC in its October 2020 Federation Account Allocation Committee (FAAC) report, explained that it has continued to pay the debt to the IOCs since a discount was negotiated by former Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, in December 2016, from about $5.1 billion to $4.6 billion.
Within the period, the corporation stated it has paid a total of $3.02 billion to Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG), Mobil Producing Nigeria (MPN), Chevron Nigeria Limited (CNL) and Nigeria Agip Oil Company (NAOC).
It stated that SPDC which was owed a negotiated debt of about $1.4 billion has been paid about $455 million so far, TEPNG which is owed $610 got $307 million, NAOC which is also owed $774 million has been paid $389 million while CNL which is owed $1.097 billion has been paid just $$1.042 billion.
Out of the five IOCs, the corporation said that only MPN which the country owed $833 million has been fully paid, thereby relieving it of any debt to the oil company. With this, the NNPC explained that all incremental barrels of oil from its JV operations with MPN has reverted back to base.
In this regard, the corporation noted that Nigeria’s debt burdens to SPDC, TEPNG, NAOC and CNL as at August 2020 were $917 million, $303 million, $384 million and $55.4 million respectively.
Kachikwu, in 2016 negotiated with the IOCs and secured a discount of 25 per cent with each of them on the pre-2016 cash call arrears; this resulted in a final settlement of $5.1 billion payable from incremental production from the JV assets over a five-year tenor without any interest charges during the repayment period.
The discount was according to the terms of the negotiation not qualified for tax deduction. It was equally expected then that from the negotiation and repayments, a sustainable funding of the JVs production will lead to an increase in national oil production from 2.2 million barrels per day (mbpd) which it was then to 2.5mbpd by 2019.
Kachikwu also disclosed in 2017 that the government followed its negotiations with the IOCs by paying the first tranche of $400 million to them.