NNPC Pays $452.5m Cash Call Arrears To IOCs In One Year

The Nigerian National Petroleum Company (NNPC) paid an additional cash call arrears of $452,535,270 to its joint venture (JV) partners between November 2020 and November 2021, bringing to $3.54 billion the total debts it paid to the international oil companies (IOCs) since 2016, THISDAY reports.

New data from the national oil company indicated that among the five International Oil Companies (IOCs) being owed the backlog, Mobil Nigeria Producing and Chevron Nigeria Limited (CNL) had been fully settled as of November 31, 2021.

The figures gleaned from the NNPC’s presentation to the Federation Account Allocation Committee (FAAC) for January 2022, revealed that the two oil majors got a total of $833.7 million and $1.097 billion, respectively, since the arrears repayments started in 2016.

However, a THISDAY analysis of the data showed that the NNPC still has an outstanding balance of $1.143 billion, according to the latest data, out of the negotiated total debt of $4.689 billion with the Joint Venture (JV) partners over five years ago.

Aside from Mobil and Chevron, other oil majors that are being owed arrears by the NNPC include Shell Petroleum Development Company (SPDC), Total Energies and Nigerian Agip Oil Company (NAOC).

While the SPDC has been paid $680.6 million so far, with an outstanding $691.9 million out of the initial $1.37 billion owed, Total as of November 31, 2021, had been paid $411.73 million with a balance of $199.2 million, out of total debt of $610.97 million.

Furthermore, with an initial debt of $774.6 million owed NAOC, payment to date made to the oil company was $522.6 million, with an outstanding of $252 million.

The NNPC, in 2016, signed a cash call repayment agreement with its JV partners to defray cash-call arrears within five years after many years of its indebtedness to its partners.

Before then it had consistently for years failed to meet its indebtedness to the IOCs, a situation the operators said caused loss of new investments in the oil and gas sector.

At the time, the Ministry of Petroleum Resources had negotiated a discount with the IOCs, comprising SPDC, Total, Mobil, Chevron and Agip from about $5.1 billion down to $4.68 billion and had since then continued to reduce the debt payments in instalments.

The NNPC further explained that in the case of SPDC, repayment was from the price balance distribution on Project Santolina; while in the case of CNL, repayment was from price balance distribution on Projects Cheetah and Falcon.

“NNPC has fully repaid its cash call arrears to MPN and all incremental barrels have reverted to base,” the company said.

The cash call arrangements, under which NNPC had to pay for its 55 per cent to 60 per cent share of investment in the upstream joint ventures, had been in place for over 40 years before it was restructured.

Recently, President Muhammadu Buhari had declared that the reforms initiated by his administration in 2015 when he took office, including the JV renegotiations, succeeded in saving the oil and gas industry in the country from total collapse.

Buhari noted that, for instance, the payments of huge cash call backlog owed the country’s JV partners took off a huge burden from the NNPC, saying that the current transparency drive in the national oil company was a product of those critical restructurings.

The president lamented that the sector which accounts for a huge source of foreign exchange for Nigeria, was in dire straits when he took over.

“When we were elected into office in 2015, the industry was in a very dire situation worsened by a backlog of Joint Venture (JV) Cash Call arrears.

“The industry needed reforms to attract more investments and attract the needed revenue to support the nation’s economic growth.

“As a new administration, we needed to act fast to address the declining prospects of the industry and aggressively drive economic recovery and improve the country,” Buhari had said.

Aside from the cash call presentation before the joint committee, the NNPC in its data further explained that it would deduct N127 billion during next month’s FAAC, for what it termed under-recovery.

But the N127 billion February projected petrol subsidy payment (for January) is far less than the N270 billion netted off the company’s revenue in December 2021, accounting for the highest under-recovery paid yet.

“The November 2021 value shortfall recovery on the importation of PMS (petrol) amounted to N270,831,143,856.56. The recovery consists of the November 2021 value shortfall of N220.110.853.427.56, plus the outstanding value shortfall recovery of N50,720,290,429.00 for October 2021.

“The estimated value shortfall of N127.035,585.354.25 is to be recovered from January 2022 proceed due for sharing at the February 2022 FAAC meeting,” it stated.

According to the information, the overall NNPC crude lifting of 8.31 million barrels (export & domestic crude) in November 2021 recorded a 7.78 per cent increase relative to the 7.71 barrels lifted in October 2021.

THISDAY had reported that Nigeria recorded an average production of 1.27 million barrels per day in November/December, while crude oil and gas export revenue received in December 2021 amounted to $5.13 million and $40.14 million respectively.

Nigeria LNG feedstock gas receipt was $113.39 million, including receipts of $51.85 million which slipped to December that ought to have been received in November 2021.

For other receipts, the NNPC data showed that the sum of $62.35 million, being miscellaneous receipts, gas fees, as well as interest income was received in December 2021.

In addition, the sum of N352,518.463,538.25 was the gross domestic crude oil and gas revenue for December, while strategic holding cost and pipeline repairs amounted to N3,976,516,985.27 even as product losses amounted to N3,307,613,578.863.