NNPC raising $3.3bn from OML 13 to fund cash call arrears

The Nigerian National Petroleum Corporation (NNPC) is seeking to raise $3.15 billion through developing the 416 million barrels of reserves from the Oil Mining Licence (OML) 13 field located in Akwa Ibom which will go towards funding cash call debts.

In addition, the corporation is also seeking to raise about $2.3billion in financing from third parties including joint venture partners to help cover the cost of its share in oil production common called cash call, a Reuters report said Friday.

OML 13, a field which the NNPC persuaded President MuhammedBuhari to recover from its operators in 2016 citing non compliance with the provision of the Petroleum Act on payment of signature bonus and irregular award, is currently operated by Sterling Energy and Exploration Production Limited, an Indian group on behalf of NPDC.

The NNPC announced exit from cash call arrears from January last year, a debt burden that rose to $6.7bn, by reaching an agreement with IOCs to trim down the amount to $5.1bn knocking off $1.6bn. By the terms of the agreement, Nigeria will repay the $5.1bn over the course of five years but it has struggled to fulfil this obligation.

Relative production stability has been achieved because the Federal Government agreed to continue receiving royalties, taxes and profit from its equity share of JV oil and gas production while the cost of operation is deducted upfront.

The NNPC said it had paid $993.7 million up to September in arrears owed to its joint ventures with multinational oil companies by September, and still had to make up payments of $3.95 billion, according to Reuters report.

Between January and July this year, the Federal Government paid the sum of N591.3 billion as cash call repayment to five International Oil Companies (IOCs) including ExxonMobil, Chevron, Shell, Total and Eni.

According to the Nigerian Bureau of Statistics (NBS) data, the Federal Government paid N60.350bn in January, N82.8bn in February and N94.4bn in March. For the months of April and May, it paid N68.5bn and N60.38bn respectively. The month of July recorded the highest payment of N130.7bn.

This has helped Nigeria raise production to over 1.7million barrels per day according to IbeKachikwu, minister of state Petroleum Resources.