Nigeria authorities have opened talks with oil majors and banks to raise capital for new drilling projects and to repay up to $4 billion in debt that the Nigeria National Petroleum Corporation (NNPC) had accumulated following years of mismanagement.
Emmanuel Ibe Kachikwu, who is also the Minister of State for Petroleum, said he wanted to increase output to up to 2.5 million barrels per day by the end of 2016 from 2.3 million bpd.
Nigeria’s oil and gas output has been relatively stagnant as big offshore projects have been held up by poor government funding and uncertainty over fiscal terms. It is expected that the latest move would help re-stream production-sharing contracts and joint ventures (JVs) between Nigeria and local or foreign firms where investments have been held up over NNPC’s failure to pay its counterpart funds since 2012.
Kachikwu said debt as of November stood at $3.5-$4 billion, which NNPC wanted to cut through deals such as a $1.2 billion multi-year drilling financing signed with Chevron in September.
“The target is that over 2017, we’ll begin to look at zero,” he said in an interview with Reuters.
“NNPC has been in talks with oil majors including Eni and oil traders Vitol and Gunvor, seeking partnerships to revamp assets such as refineries after decades of neglect. The Corporation had reported a loss of N267.14 billion ($1.3 billion) for 2015.
“My idea would be to bring in third party capital, do a joint investment and management of the refineries and work out a pay-out process over five to six years basically on lifting of some portion of the finished products,” Kachikwu said.
He added that the government would also advertise concessions for pipelines and depots next month.
NNPC was also looking into revamping joint ventures with local firms to boost productivity but this would depend on the Petroleum Industry Bill (PIB), which has been held up in parliament for years.
Kachikwu said NNPC was in talks with the Senate to speed up the process by splitting the PIB into three parts covering governance, taxation and business items such as oil block licensing.
NNPC would also restructure strategic alliance agreements held by Atlantic Energy to raise funds for oil blocks sold by Royal Dutch Shell.
The Minister said NNPC expected to conclude a deal within two months for a new partner to pay up to $1.3 billion to take over the Atlantic agreements. The blocks were originally sold to indigenous oil companies by Shell.
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