Yemisi Izuora
The Petroleum and Natural Gas Senior Staff Association of Nigeria
Nigerian (PENGASSAN) advised the Federal Government to put machinery in place for the payment cash call in the Nigerian National Petroleum Corporation (NNPC) Joint Venture (JV) operations with the oil companies.
It reminded government that the backlog of cash call is restraining investment in the sector as the major oil companies are presently discouraged.
Speaking on the government’s inability to fund JV operations and owing oil companies arrears of cash calls, the National Public Relations Officer of PENGASSAN, Comrade Emmanuel Ojugbana, noted that the Joint Venture between the NNPC and oil companies presently accounts for more than 60 percent of Nigeria’s crude oil production.
Ojugbana noted that contributions of the JV operations to the nation’s economy cannot be under emphasized despite increasing production from the Production Sharing Contracts (PSC) fields.
“The JV structure is an average of 55 percent for the NNPC and 45 percent for private oil companies. Unfortunately, despite the fact that NNPC has a larger chunk of the proceeds from the JVs, it has always been defaulting in payment of its own counterpart funding of projects.
“Exploration activity has been greatly recessed by the challenge of funding the operating budget and cash call obligations. Over 50 percent cut in JV funding and irregular release of Cash Call has made the operators to scale down on the whole spectrum of the E&P operations,” he said.
According to him, oil companies are owed billions of dollars in cash call arrears putting the jobs of our members and other workers in the industry in jeopardy as companies easily rationalize by disengagement of staff and reduction in welfare packages due to lack of funds based on outstanding funding arrears.
He further clarified that the lack of funding of the JV operations in the country’s oil and gas business translates to reduced work programmes by the oil companies, which leads to reduction in re-investment and on a larger scale revenue to the federation.
“There is depletion in national reserves due to lack of exploration activities, as many fields are yet to be developed by International Oil Companies (IOCs) due to lack of funds, which extrapolate to decrease in what is accruable to the national coffers if we could harness this untapped wealth,” he said.