Saturday, May 15, 2021

Oil Majors doing business in Nigeria gets $3 billion operational arrears

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Naija247news, Nigeria
Naija247news is an investigative news platform that tracks news on Nigerian Economy, Business, Politics, Financial and Africa and Global Economy.

Oil companies including Exxon Mobil Corp. and Royal Dutch Shell Plc doing business in Nigeria has received $3 billion, moving closer to clearing operating expense arrears owed since 2010, source familiar with the deal told Naija247news

The payment is being settled through a five-year crude oil sales deal agreed in 2016, Nigerian National Petroleum Corp. said in a statement. While a majority has been paid as of August, there’s still about $1.7 billion outstanding. Exxon has got $2.3 billion, clearing all dues. Shell has received $455 million, but is still owed $917 million.

NNPC operates joint ventures with producers including Exxon Mobil, Shell, Chevron Corp., Total SE and Eni SpA that pump about 80% of Nigeria’s output. Lower revenue and demands for other payments hampered NNPC’s ability to contribute its share of expenses from 2010 to 2015, leading to the arrears.

It still owes Eni $385 million, Total $304 million and Chevron $55 million, according to the statement. The oil majors didn’t immediately respond to requests for comments.

Paid as of August Outstanding
Exxon $2.3b none
Shell $455m $917m
Chevron $1.04b $55m
Total $307m $304m
Eni $390m $385m
Source: NNPC

Nigeria had agreed a $5.1 billion settlement with the international oil companies four years ago. As of July 2019, NNPC had cleared $2.3 billion.

The Nigerian state-run company on Oct. 15 published audited accounts for only the second time in its 43-year history. The report showed its annual loss shrank to just a few million dollars last year from about $2 billion in 2018 as it slashed costs across its operations

The payments to the oil companies suggest NNPC has enough profit and cash to afford it. That’s good news for Nigeria’s oil industry, which generates about half of all government revenue. But like oil companies around the world, NNPC is also facing weak global demand because of the coronavirus and new restrictions to contain it.

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