The Federal Government, through the Nigerian National Petroleum Corporation, spent a total of N1.08tn ($3.53bn) on joint venture oil and gas assets from January to July this year, latest data from the corporation showed.
A total of N1.829tn, over half of the total revenue generated from oil and gas sales last year, was used for the payment of JV cash calls in 2018.
The government had said it would reduce its stakes in the JV assets to 40 per cent this year but it remains uncertain whether this will be done.
The NNPC, which represents the Federal Government in the JVs with private oil firms, has an obligation to make cash call payment for the development of the JV assets.
Data obtained by our correspondent from the corporation on Wednesday showed that the N1.08tn was transferred into the JV cash call account from the proceeds of oil and gas exports and domestic sales.
The dollar allocation to the JV cash call account was $2.17bn while the naira portion was N416.02bn ($1.36bn at a budgeted exchange rate of N305/$).
The nation’s oil and gas production structure is majorly split between the JV onshore and in shallow water with foreign and local companies and Production Sharing Contracts in deepwater offshore, to which many international oil companies have shifted their focus in recent years.
Under the JV arrangement, both the NNPC and private operators contribute to the funding of operations in the proportion of their equity holdings and generally receive the produced crude oil in the same ratio.
“Total oil and gas export receipt of $390.33m was recorded in July 2019 as against $312.93m in June 2019. Of the export receipts, $93.26m was remitted to the Federation Account while $297.07m was remitted to fund the JV cost recovery for July 2019 to guarantee current and future production,” the NNPC said.
The Chairman, Petroleum Club, Lagos, Mr Godswill Ihetu, said the reduction of FG’s stakes in the JV would lessen the crude oil to be sold by the NNPC, adding, “I think this is better scenario.”
The 2019 approved budget public presentation revealed that President Muhammadu Buhari had directed that immediate action be commenced to restructure the JV oil assets “so as to reduce government shareholding to not less than 40 per cent and that this exercise must be completed within the 2019 fiscal year.”