Yemisi Izuora
The Nigerian National Petroleum Company, Limited, NNPCL, says the path of growth in the oil and gas industry has been made clear especially with regard to upscaling production following recent resolution of contract disputes with oil majors in the country.
Chief Executive Officer, CEO, of the NNPC, Mallam Mele Kyari, while speaking at the 2022 National Association of Energy Correspondents strategic conference in Lagos on Thursday assured of the possibility of the country meeting 2 million daily crude production in a short time.
He spoke on the theme, “Energy Transition: Shaping The Future Of Nigeria’s Energy, An Appraisal Of PIA, Evolving Benefits And Challenges”
Kyari, said though Nigeria has been producing below its OPEC target due to security challenges, heavy oil theft, fiscal policy deficit and financing gap but all of them are being addressed.
He said a robust engagement is ongoing with security agencies to decisively deal with oil theft and attract investors especially in the deepwater space.
The Nigerian National Petroleum Corporation (NNPC) recently recompensed oil supermajors including Royal Dutch Shell Plc and Exxon Mobil Corp. around $3.02 billion, drifting nearer to clearing a heap of accumulated operating expenses owed since a decade ago.
The payment is being made via a five-year crude oil sales pact negotiated in 2016 by then Minister of State for Petroleum Resources Ibe Kachikwu
Granted that a substantial sum has been paid as of August, around $1.7 billion remains to be settled. Exxon has received $2.3 billion, clearing all dues while Shell is in receipt of $455 million. Yet, it is still owed $917 million.
The NNPC runs joint ventures with energy giants like Chevron Corp., Shell, Exxon Mobil, Eni SpA and Total SE which pump almost 80% of Nigeria’s output.
Weaker income and demand for other payments have imperilled NNPC’s capacity to contribute its share of costs from 2010 to 2015, resulting in the arrears.
It is still indebted to Eni to the tune of $385 million, Total $304 million and Chevron $55 million, the report said.
Nigeria had consented to a $5.1 billion settlement with the supermajors in 2016. NNPC had cleared $2.3 billion as of last July.
Last week, it published the NNPC audited financial statements, its second time in its 43-year history. It reported a reduction of its annual loss to only some million dollars in 2019 from around $2 billion in 2018 as it pared down costs across its operations.
Like oil companies globally, NNPC is also confronting a feeble global demand because of the coronavirus pandemic outbreak.
Kyari, expressed optimism that the payment to the oil companies may boost commitment to further exploration activities in Nigeria.
He also said efforts are ongoing to ensure smooth energy transition utilising the country’s vast gas deposits.