The Petroleum Technology Association of Nigeria (PETAN) has stated that the exit of joint venture cash calls by the Nigerian National Petroleum Corporation (NNPC) will end the era of project deferments and cancellations by the international oil companies (IOC), which were caused by paucity of funding, THISDAY reports.
The NNPC in December 2016 exited the cash call arrangement with the IOCs and got a discount of $1.7 billion from the $6.8 billion it owed its JV partners as cash call obligations.
Under the deal, the corporation was requested to pay $5.1 billion out of the $6.8 billion, in addition to the $1.2 billion cash call debt owed the partners in 2016. The corporation paid the first tranche of $400 million in April 2017 with a firm commitment to pay the outstanding debts before April 2018.
With NNPC’s exit of the JV cash call model, the JV partners adopted a self-funding model to execute oil and gas projects, thus freeing the federal government from budgetary allocations for the projects. Speaking to journalists at the weekend the Chairman of PETAN, Mr. Bank-Anthony Okoroafor said the country’s exit from the JV cash call model would end the era of project deferments and cancellations by the IOCs. He said the new self-funding model will also open up Nigeria’s oil and gas sector and ensure that the service providers are paid promptly by the IOCs.