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NNPC Owes Oil Firms N2tn in Cash Call —GMD

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  • NNPC Owes Oil Firms N2tn in Cash Call

The Nigerian National Petroleum Corporation has put the cash call arrears owed oil companies for the development of joint venture assets at $6.6bn (N2.01tn).

The Group Managing Director of the corporation, Dr. Maikanti Baru, disclosed this on Monday at the inauguration of the reconstituted NNPC Anti-Corruption Committee in Abuja, according to a statement.

He also said the four major investments the NNPC recently embarked upon with key upstream JV partners were capable of providing incremental revenue to the national treasury by over $30bn within the next 10 years.

He said the investments, which attracted close to $3.8bn in foreign direct investments, would serve as a vehicle to fast-track the prevailing post cash-call exit era.

Baru listed the JV alternative financing upstream investments to include the $1.2bn multi-year drilling for 36 offshore/onshore oil wells under the NNPC/Chevron Nigeria Limited, and the NNPC/First E&P JV and Schlumberger tripartite $800m alternative funding agreement for the development of the Anyalu and Madu fields in the Niger Delta.

Others were the agreements executed in London last week for the $1bn NNPC/SPDC JV Project Santolina and the NNPC/Chevron $780m Project Falcon on Sonam, hitherto financed through the JV cash call.

He said, “These four projects alone are going to raise incremental revenues to Nigeria of over $30bn over the life of the projects in less than 10 years. They will also serve as part of the vehicle for exiting the JV cash calls.

“We have to pay our arrears of about $6bn incurred pre-2016 and we are also paying up a tranche of about $1bn 2016 arrears. We started in April 2017 with the payment of $400m and we will pay the balance before the anniversary of the first payment.”

According to the GMD of the NNPC, the arrangement will allow the corporation to subsequently operate from the production revenue less the first line charge to the government, which is the royalties and petroleum profit tax.

He said the profit would be remitted to the government after deduction of production cost.

Baru traced the NNPC’s involvement in the anti-corruption campaign to the year 2000 when the Federal Government directed all its ministries, departments and agencies to establish in-house anti-corruption committees.

He described the NNPC as the first to put a committee in place within a month, precisely in October 2000, with him as the chairman then.

He noted that since then, the NNPC Anti-Corruption Committee had consistently carried out its mission of eradicating corruption in the NNPC through organising sensitisation campaigns, workshops, seminars and the Federal Government’s publications on issues concerning corruption and economic crimes.

The new committee is headed by Mr. Mike Stanley Balami, a group general manager in the finance and account directorate.

Meanwhile, crude oil production in Nigeria dropped to 656.80 million barrels last year compared to a high of 860.28 million barrels in 2012, the Nigerian Bureau of Statistics said on Monday.

The NBS, in a new report entitled: ‘Selected petroleum statistics: Oil and gas production, drilling and development,’ said the nation’s oil output stood at 777.49 million barrels in 2015.

It said a total of 2.71 trillion standard cubic feet of gas was produced in 2016 as against three trillion scf of gas produced in 2015 while 2.40Tscf of gas was utilised in 2016 as against 2,67Tscf utilised in 2015.

The NBS said it verified and validated the data supplied by the ministry of petroleum resources.

The nation’s average oil production including condensates, increased marginally to 2.06 million barrels per day in July, according to the petroleum ministry, Platts reported on Monday.

The ministry said the country’s crude output stood at 2.06 million bpd in July, up from 2.05 million bpd in June, and a sharp increase over the 1.6 million bpd output a year ago when production facilities were hit by attacks from Niger Delta militants.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Nigeria, Morocco sign MOUs on Hydrocarbons, Others

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The Federal Government and the Kingdom of Morocco have signed five strategic Memoranda of Understanding that will foster Nigerian-Morocco bilateral collaboration and promote the development of hydrocarbons, agriculture, and commerce in both countries.

The Minister of State for Petroleum Resources, Chief Timipre Sylva, led the Nigerian delegation to the agreement signing ceremony on Tuesday at Marrakech, Morocco, while the Chief Executive Officer of OCP Africa, Mr Anouar Jamali, signed for the Kingdom of Morocco, according to a statement by the Nigerian Content Development and Monitoring Board.

Under the agreement between OCP, NSIA and the Nigerian National Petroleum Corporation, Nigeria will import phosphate from the Kingdom of Morocco and use it to produce blended fertiliser for the local market and export.

The statement said Nigeria would also produce ammonia and export to Morocco.

“As part of the project, the Nigerian Government plans to establish an ammonia plant at Akwa Ibom State,” it said.

The Executive Secretary of NCDMB, Mr Simbi Wabote, and the Group Managing Director of NNPC, Mallam Mele Kyari, were part of the delegation and they confirmed that their organisations would take equity in the ammonia plant when the Final Investment Decision would be taken, the statement said.

Sylva said the project would broaden economic opportunities for the two nations and improve the wellbeing of the people.

He added that the project would also positively impact agriculture, stimulate the growth of gas-based industries and lead to massive job creation.

He said the President, Major General Muhammadu Buhari (retd.), had mandated the Ministry of Petroleum Resources and it agencies and other government agencies to give maximum support for the project.

“He mandated me to ensure that at least the first phase of this project is commissioned before the expiration of his second term in office in 2023,” he added.

According to the statement, the MOUs were for the support of the second phase of the Presidential Fertiliser Initiative; Shareholders Agreement for the creation of the joint venture company to develop the multipurpose industrial platform and MOU for equity investment by the NNPC in the joint venture and support of the gas.

Other agreements are term sheet for gas sales and aggregation agreement and MOU for land acquisition and administrative facilitation to the establishment of the multipurpose industrial platform for gas sales and aggregation agreement.

The NCDMB boss described the bilateral agreement as significant to the Nigerian economy as it would accelerate Nigeria’s gas monetisation programme through establishment of the ammonia plant in the country.

The agreement would also improve Nigeria’s per capita fertiliser application through importation of phosphate derivatives from Morocco, he added.

Wabote challenged the relevant parties to focus on accelerating the FID, assuring them that the NCDMB would take equity investment for long-term sustainability of the project.

He canvassed for the setting up of a project management oversight structure to ensure project requirements and timelines are met.

“There is also need to determine manpower needs for construction and operations phase of the project and develop training programmes that will create the workforce pool from Nigeria and Morocco and design collaboration framework between research centres in Nigeria and Morocco to develop technology solutions for maintaining the ISBL and OSBL units of the Ammonia complex,” he said.

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Dangote Fertiliser Plant to Commence Shipment of Urea in March 2021

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Dangote to Sells Petrol in Naira, Plans to Commence Urea Shipment in March 2021

The Governor of the Central Bank of Nigeria, Mr. Godwin Emefiele, has said Dangote Fertiliser Plant will commence shipment of Urea in March 2021.

The CBN governor disclosed this during an inspection tour of the sites of Dangote Refinery, Petrochemicals Complex Fertiliser Plant and Subsea Gas Pipeline at Ibeju Lekki, Lagos on Saturday.

Emefiele further stated that Dangote Refinery would sell refined petroleum products in Naira when it starts production.

This he said would save the country from spending 41 percent of the nation’s foreign exchange on importation of petroleum products yearly.

Based on agreement and discussions with the Nigerian National Petroleum Corporation and the oil companies, the Dangote Refinery can buy its crude in naira, refine it, and produce it for Nigerians’ use in naira,” Mr Emefiele said.

That is the element where foreign exchange is saved for the country becomes very clear. We are also very optimistic that by refining this product here in Nigeria, all those costs associated with either demurrage from import, costs associated with freight will be totally eliminated.

Emefiele explained that this will make the price of Nigeria’s petroleum products affordable and cheaper in naira.

If we are lucky that what the refinery produces is more than we need locally you will see Nigerian businessmen buying small vessels to take them to our West African neighbours to sell to them in naira.

“This will increase our volume in naira and help to push it into the Economic Community of West African States as a currency,” Mr Emefiele said.

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UK Budget 2021: Will Sunak’s Budget Run Into Unintended Consequences?

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Rishi Sunak’s Budget will encourage higher earners to consider their “international financial options” and will drive businesses away from the UK, warns the CEO of one of the world’s largest independent financial advisory and fintech organizations.

The warning from Nigel Green, chief executive and founder of deVere Group, comes as the Chancellor delivered his 2021 Budget in the House of Commons, his second since he took on the role.

Mr Green says: “The Chancellor has got an extraordinarily difficult hand to play as he tries to stem the economic damage caused by the pandemic, support jobs and businesses and, crucially, rebuild the public finances.

“Whilst Mr Sunak is being hailed a hero for the continued and unprecedented levels of support, it should also be remembered that he is – in a stealth move – dragging more people firmly into the tax net.

“He is raising taxes under the radar.

“Yes, there is no income tax rise. However, he is freezing personal tax thresholds, meaning as incomes rise and thresholds don’t, he is able to raise money by fiscal drag.”

Earlier this week, the deVere CEO noted: “Those most impacted by this stealth move will be looking at the financial planning options available to them, including international options, in order to grow and protect their wealth.”

Rishi Sunak also confirmed that corporation tax will increase to 25% from 2023, up from the current level of 19%.

Of this tax hike, Mr Green goes on to say: “Lower corporation tax helps job and wealth-creating business to survive and thrive. It also helps attract business to move and invest in the country.

“Instead of increasing taxes, Mr Sunak should have relentlessly focussed on growth and stimulus policies for businesses.  This would have been of greater help to firms, the economy, jobs and, ultimately, the Treasury’s coffers.”

He adds: “Again, this corporation tax hike is likely to serve as a prompt for businesses to consider their overseas financial options.”

The deVere CEO concludes: “The Chancellor had to perform a tough juggling act.  But stealthily dragging more people into the tax net and raising corporation tax might have negative, unintended consequences for the Treasury’s bottom line.”

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