Chineme Okafor in Abuja
The Nigerian National Petroleum Corporation (NNPC) wednesday said it has defrayed the cash call debts owed an International Oil Company (IOC) Mobil Producing Nigeria (MPN) with a payment of $833.57 million.
It said in a statement from its Group General Manager, Group Public Affairs, Mr. Ndu Ughamadu, that its full settlement of the debt to Mobil occurred barely two years after it signed a cash-call repayment agreement with it and other Joint Venture (JV) partners in oil and gas production.
According to the statement sent from Abuja, the Group Managing Director of NNPC, Dr. Maikanti Baru, said this at a commemorative close-out ceremony to mark the conclusion of NNPC/MPN cash call repayment agreement, adding that the feat was a product of determination and hard work.
Baru, according to the statement, stated that NNPC’s management came up with the novel cash-call exit strategy to boost investors’ confidence and grow Nigeria’s oil and gas industry.
He added that the payment did not in any way undercut remittances to the Federation Account as it was achieved through revenue from incremental production.
“It is gratifying to note that within two years of this agreement, the NNPC/MPN JV significantly executed in incremental activities that generated adequate proceeds to liquidate the $833.57 million cash-call arrears, whilst ensuring that revenue flow from the JV to the federation remained stable,” Baru said in the statement.
He further explained that with the close-out of the repayment agreement, the entire incremental production which is over 45,000 barrels of oil per day (bpd) has been migrated to federation’s equity and would invariably lead to an increase in revenue to the government.
Baru equally acknowledged the support of President Muhammadu Buhari and some relevant agencies in achieving the speedy execution of the repayment plan.
He said the next level, “is for NNPC and MPN to within two years, migrate the Joint Venture (JV) into an Integrated Joint Venture (IJV) with its board operating independently and paying dividends to its shareholders.”
The statement also quoted the Managing Director of MPN, Mr. Paul McGrath, as saying that the milestone was a victory for MPN, NNPC and Nigeria.
MacGrath commended Baru for driving a transparent system that brought about the early close-out of the repayment agreement.
He stressed that MPN had no more fear or reservation in dealing with NNPC in future projects.
“I would like to commend the leadership team of the NNPC, especially the Group Managing Director, Dr. Maikanti Baru, for his strong and relentless leadership that has resulted in the resolution of what was becoming an intractable matter. This is in addition to other noteworthy contributions he has made to the advancement of the industry since assuming office,” MacGrath said in the statement.
The statement noted that the high-point of the event was the official signing of Deed of Settlement of Pre-Production Costs for Usan in Oil Prospecting Licence (OPL) 222/Oil Mining Lease (OML) 130 at a negotiated cost of about $1.076 billion as against an initial $1.45 billion.