Fed Govt Spends N464bn On Oil Joint Ventures
The Federal Government spent N464.2bn in the first three months of 2020 on oil and gas assets being developed through joint ventures with private firms, mostly international oil companies, the latest data from the Nigerian National Petroleum Corporation have shown.
The nation’s oil and gas production structure is majorly split between the JV (onshore and in shallow waters) and the Production Sharing Contracts in deepwater offshore.
Under the JV arrangement, both the NNPC and the private firms contribute to the funding of operations in the proportion of their equity holdings and generally receive the produced crude oil in the same ratio.
The NNPC, which represents the Federal Government in the JVs, has an obligation to make cash call payment for the development of the assets.
The cash call payment by the national oil firm in Q1 represents 48.41 per cent of the total revenue (N954.85bn) generated in the period from the exports and domestic sales of crude oil and gas.
The dollar allocation to the JV cash call account was $726.6m or N221.61bn (from oil and gas export receipt of $1.27bn or N524.6bn) while the naira portion was N242.59bn (from domestic oil and gas sale proceeds of N434.25bn).
The NNPC said the transfers were made to the JV cash call account as first line charge “to guarantee current and future production”.
In its latest monthly report, the corporation said, “Total export receipt of $362.18m was recorded in March 2020 as against $282.32m in February 2020.
“Contribution from crude oil amounted to $292.42m while gas and miscellaneous receipts stood at $65.60m and $4.16m respectively.
“Of the export receipts, $141.14m was remitted to the Federation Account while $221.04m was remitted to fund the JV cost recovery for the month of March 2020 to guarantee current and future production.”
The federation crude oil and gas lifting is classified into equity export and domestic, both of which are lifted and marketed by the NNPC and the proceeds remitted into the Federation Account.
The equity export receipts, after adjusting for the JV cash calls, are paid directly into the Federation Account domiciled in the Central Bank of Nigeria.
Domestic crude oil of 445,000 barrels per day is allocated for refining to meet domestic product supply.
Payments are effected to the Federation Account by the NNPC after removing crude and product losses, pipeline repairs and management costs incurred.
