NNPC pays USD 833.57m to Mobil, clears arrears

ABUJA, Nigeria – Barely two years after the Nigerian National Petroleum Corporation (NNPC) signed a Cash-call Repayment Agreement with its Joint Venture partners to defray cash-call arrears within a period of five years, the Corporation has fully settled the total amount owed to Mobil Producing Nigeria (MPN) with a payment of $833.57m.

The Group General Manager, Group Public Affairs Division of NNPC, Mr. Ndu Ughamadu, stated this in a press release made available to press men on Wednesday.

According to Mr. Ughamadu, the Managing Director of NNPC, Dr. Maikanti Baru, who spoke at a commemorative close-out ceremony to mark the conclusion of NNPC/MPN Cash Call Repayment Agreement, disclosed that the feat was a product of determination and hard work.

Dr. Baru stated that NNPC management came up with the novel cash-call exit strategy to boost investors’ confidence and grow the nation’s oil and gas industry, adding that the payment did not in anyway undercut remittances to the Federation Account as it was achieved through revenue from incremental production.

“It is gratifying to note that within two years of this agreement, the NNPC/MPN JV significantly executed in incremental activities that generated adequate proceeds to liquidate the $833.57 million cash-call arrears, whilst ensuring that revenue flow from the JV to the Federation remained stable”, the GMD stated.

He explained that with the close-out of the repayment agreement, the entire incremental production which is over 45,000 barrels of oil per day (bopd) has been migrated to Federation’s equity and would invariably lead to an increase in revenue to the Government.

Dr. Baru acknowledged the support of President Muhammadu Buhari and some relevant agencies in achieving the speedy execution of the repayment plan, adding the next level “is for NNPC and MPN to within two years, migrate the Joint Venture (JV) into an Integrated Joint Venture (IJV) with its Board operating independently and paying dividends to its shareholders”.

On his part, the Managing Director of the Mobil Producing Nigeria, Mr. Paul McGrath said the milestone was a victory for MPN, NNPC and Federal Government of Nigeria.

Mr. MacGrath commended Dr. Maikanti Baru for driving a transparent system that brought about the early close-out of the repayment agreement, stressing that MPN had no more fear or reservation in dealing with NNPC in future projects.

“I would like to commend the leadership team of the NNPC, especially the Group Managing Director, Dr. Maikanti Baru, for his strong and relentless leadership that has resulted in the resolution of what was becoming an intractable matter. This is in addition to other noteworthy contributions he has made to the advancement of the industry since assuming office”, the MPN boss said.   

The high point of the event was the official signing of Deed of Settlement of Pre-Production Costs for Usan in OPL 222/OML 130 at a negotiated cost of about $1.076billion as against initial $1.45billion cost.