The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has said the corporation and its partners are close to resolving two of the disputed oil assets – the Oil Mining Leases OML 118 and OML 125.
Kyari also debunked media reports that the NNPC made an unauthorised withdrawal from the Nigeria Liquefied Natural Gas (NLNG) Dividend Account, describing such reports and allegations as pedestrian.
The two assets, Bonga and Abo respectively, are products of the contentious Production Sharing Contract (PSC) arrangement and have been subject of litigation for years, contributing to the delay in achieving the country’s three million barrels per day oil production target.
NNPC had previously signed the Abo OML 125 Head of Terms Agreement with Nigeria Agip Exploration Limited (NAE) in a move at resolving issues, which have lingered in most deep offshore PSCs.
Kyari, at a media parley in Abuja at the weekend, expressed optimism that the resolution will end all the conflicts on the assets and bring back production at the assets.
“As I speak to you now, on two of the assets –Bonga asset (OML 118) and OML 125 asset, today, we are almost close to having complete commercial closure, which will take away all the conflicts, so that we and our partners can move forward in this and we are very proud of it,” he said.
Narrating how Nigeria entered an agreement with the oil companies without proper knowledge of its outcome, Kyari said concessions were granted to companies to go into production in the deepwater assets, noting that that had resulted in the over $9 billion of contingent liability to the corporation and to the country.
He said: “In the past and as you may be aware, we had entered several production arrangements, from the Joint Venture to the Production Sharing Contract and some Service Contracts.
“The popular one is the 1993 PSC, which at that time, we all thought that the Niger Delta deepwater was a much unknown terrain and so many concessions were granted so that people could go into production.
“But with the benefit of hindsight, we ran into an agreement that we really didn’t understand. And the end result is litigation – over $9 billion of contingent liability to the corporation and to the country of course. We made the mistake on your behalf, so you take the bullet. But that we know – it’s a big distraction for the industry.”
Kyari also said Nigeria recorded progress in its daily oil production this year, revealing that for the first time in 15 years, Nigeria reached the production of 2.49 million barrels per day on April 17.
He added that the three million barrels per day oil production target is achievable if the right things are done.
He said if COVID-19 had not come, Nigerians would have been celebrating the three million bpd achievement by now.
He said: “The target was to grow production to three million barrels per day. By the 17th of April this year, to be precise, we reached the production of 2.49million per day. The last time we were getting close to that was 15 years ago.
“We all know that it is possible to improve your efficiency, reduce your cost, be focused on your production choices, select assets that will work for you, and you can be there.
“We know that three million of oil production is within sight, within reach and actually, if COVID-19 hadn’t come, we would surely be celebrating that today because today we have clear visibility around what asset will produce the balance of those 450,000 barrels per day that would have been achieved anyway.”
On the alleged illegal withdrawal from the NLNG Dividends Account by the NNPC, Kyari said such had never happened, describing the reports as pedestrian.
Kyari and the Managing Director of NLNG, Mr. Tony Attah, had been under attack for allegedly colluding to withdraw $1.05 billion from the NLNG Dividends Account.
The NLNG had earlier denied the allegation, describing it as “totally baseless and untrue and should be disregarded.”
Making clarification on the matter, he said: “Also, let me use this good privilege of Femi (Femi Adesina who was also at the event) to speak about this. You know the media is awash with NNPC making illegal withdrawals from the NLNG dividend account.
“It’s very pedestrian to say the least, probably unfortunate. It’s just impossible for anyone to take out any money from any government account, not this government, without authorisation and illegally.”
Kyari explained that the dividends accounts were in the Treasury Single Accounts (TSA) and that the NNPC was not even a signatory to it and cannot do anything in that account without authorisation.
“We can’t do anything without proper authorisation and we gave the instructions, we can’t withdraw it. Let me just clarify this so that Nigerians will let this matter to rest.
“So the alleged illegal withdrawal from the NLNG Dividend Account is just hype and a very pedestrian talk. That is not possible. At the appropriate moment, we will have no difficulty publishing the statement of that account,” he said.