NNPC Pays IOCs $993.7m of $5.1bn Cash Call Debt

  • Will raise $2.3bn from third parties to help cover costs

By Chineme Okafor in Abuja with agency report

The Nigerian National Petroleum Corporation (NNPC) yesterday disclosed that it had so far paid $993.7 million of the negotiated $5.1 billion cash call debt it owed International Oil Companies (IOCs) whom it is in joint ventures oil production with.

It stated in a report from Reuters which THISDAY in Abuja obtained, that the payment was as at September 2018, and it still had to make up payments of $3.95 billion to them.

The state oil corporation also said in the report that it was seeking to raise about $2.3 billion in financing from third parties, such as joint venture partners, to help cover costs.

Similarly, NNPC stated it was raising $3.15 billion through a firm called SEEPCO to develop 416 million barrels of reserves from the oil mining licence (OML) 13 field.

Over the years, NNPC piled up unpaid bills in the form of cash calls, that it was obliged to pay IOCs with which it has joint ventures for oil exploration and production.

In December 2016, it got a discount of $1.7 billion from the $6.8 billion it originally owed its JV partners as cash call obligations and was asked to pay $5.1 billion instead. This is however in addition to the $1.2 billion cash call debt owed the partners in 2016, for which $400 million was paid in April 2017.

The delay in payments of the debt has however reportedly hindered oil and gas investment in Nigeria and worsened a budget crisis as the government seeks to increase spending to boost an economy still recovering from a recession.

According to the Reuters, the Minister of State for Petroleum, Dr. Ibe Kachikwu, said this month that Nigeria was producing 1.78 million barrels per day (mbpd) of oil.

Also, in November 2018, the Reuters quoted the NNPC to have said it would increase oil production in 2019 to 1.8mbpd.