- Kachikwu: No interest charges incurred on unpaid cash calls
Royal Dutch Shell has announced it will invest an estimated $25 billion this year in all its oil and gas operation across the world, including Nigeria.
It also said it was expecting to generate $10 billion in cash flow from the delivery of some of its new projects by 2018.
The company stated this in its first quarter 2017 financial results released on Thursday. The report also showed that Shell netted an income of $2.2 billion during the quarter under review.
Shell, with operations in more than 70 countries, is Nigeriaâ€™s oldest oil producing partner, holding various joint venture and production sharing contracts with the Nigerian National Petroleum Corporation (NNPC) and other foreign oil companies.
The company only recently announced the resumption of oil production at its 225,000 barrels per day (bd) Bonga Floating Production Storage and Offloading (FPSO) field in Nigeriaâ€™s deepwaters.
According to the company, which is also involved in a new deepwater project â€“ the $13.5 billion Zabazaba deepwater project located in Oil Prospecting Lease (OPL) 245 â€“ the repair of Bonga would ensure sustained production and reduce unscheduled production deferments.
The companyâ€™s net profit, it said, doubled in the first three months of 2017, as rebounding oil prices and refining gains helped boost its revenue.
According to the report, Shell generated a cash flow of $9.5 billion in the quarter, up 13 fold from a year earlier, and the strongest among some of its rivals in the industry.
â€œWe saw notable improvements in upstream and chemicals, which benefited from improved operational performance and better market conditions,â€ said Shellâ€™s chief executive, Ben van Beurden.
Meanwhile, the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has disclosed that beyond the discount secured by the country on the $5.1 billion joint venture cash call debt it owes international oil companies (IOCs), it also got an interest charge waiver for the five-year period it would take it to repay the debt.
Kachikwu stated this in an interaction with journalists at the 2017 edition of the annual Offshore Technology Conference (OTC) in Houston, Texas.
He said: â€œThe Federal Executive Council (FEC) had approved the ministryâ€™s proposal and the concurrence of the National Economic Council (NEC) had been obtained to begin payments and the ministry on behalf of NNPC engaged the IOCs and secured a discount of 25 per cent with each JV partner on the pre-2016 cash call arrears resulting in a final settlement in the sum of $5.1 billion payable from incremental production from the JV assets over a five-year tenor without any interest charges during the period.
â€œIn addition, the 25 per cent discount will not qualify for tax deductions. The sustainable funding of the JVs will lead to an increase in national production from the current 2.2mbpd to 2.5mbpd by 2019, while the immediate effect of the new cash call policy will increase net federal government revenue per annum by about $2 billion.â€