The monthly report published by the Nigerian National Petroleum Corporation spends $4.13 billion to fund cash call operations with international oil companies
THE Nigerian National Petroleum Corporation, NNPC, has spent $4.13 billion to fund its cash-calls obligations with the joint venture operators in the country. According to the NNPC monthly report on the operations and finances of the corporation for December 2015, the funds were channelled into funding its cash-calls obligations in the various joint venture operations with the international oil companies operating in the country.
The report, which was released in the corporation’s website, also revealed that at the close of the year 2015, the joint venture funding gulped more than 87 percent of the total dollar proceeds it made from its export crude oil and gas trade. NNPC currently maintains up to six joint venture agreements with different oil companies. They include, NNPC/SHELL/ELF/AGIP with and equity ratio of 55:30:10:5; NNPC/MOBIL – 60:40; NNPC/AGIP/PHILIPS – 60:20:20; NNPC/ELF – 60:40, NNPC/CHEVRONTEXACO – 60:40, and NNPC/PANOCEAN – 60:40.
Under the JV arrangements, all parties contribute to funding oil exploration and production operations in the proportion of their JV equity holdings and receive crude oil produced earnings in the same ratio. However, as at January 2015, the NNPC was reported to be indebted to about $5 billion in cash calls to its joint venture partners. The corporation has also faced consistent challenges meeting its funding obligation.
But following an approval for a first line charge to Federation Account as contained in 2015 budget which allowed the corporation a monthly funding of about $615.8 million to its cash call obligation, the report explained that all its crude oil and gas export receipts for the year were swept into the cash call funding pool. The corporation noted that its finances were also affected by the slide in prices of crude oil.
“The current total export receipt dropped by more than 50 per cent following further slide in crude oil prices and additional shut-in of about 35,000bopd in Usan and Yoho Terminals. Other factors include none receipt of NLNG feedstock of about $74.47 million following payment slippage into New Year and 57.08 per cent drop in LPG/NGL lifting.
“Total export crude oil and gas receipt for the period of January – December 2015 is $4.74 billion. Of the total receipts, the sum of $0.61 billion was remitted to Federation Account while the balance of $4.13 billion was used to fund the JV Cash Call for the period.
Thus JV funding has gulped more than 87 per cent of the proceeds. JV cash call is a first line charge to Federation Account and 2015 Approved Budget requires monthly funding of about $615.8m. NNPC is therefore mandated to sweep all the export receipt to JV cash call funding implying a zero remittance to Federation Account,” said the report.
— Feb 22, 2016 @ 01:00 GMT