Borno State, Nigeria has officially joined the league of oil-producing states in Nigeria, as the Federal Government has said that crude oil has been found in the state.
Permanent Secretary Ministry of Petroleum Resources, Mrs. Jamila Shua’ra, disclosed this during the agreement signing ceremony for Joint Venture (JV) Cash Call exit and presentation of the petroleum sector score card in Abuja.
Shua’ra did not however, state the particular area of Borno State where oil was discovered and if the discovery was in commercial quantity.
She attributed the discovery of oil in new frontiers, such as in Borno State and in Lagos state, as a result of the doggedness of the present administration.
In the score card presented to stakeholders, the Ministry also stated that the introduction of Price Modulation Mechanism and Appropriate Pricing Framework has helped the Federal Government save N1.4 trillion being amount that would have been expended on subsidy payment between May and November 2016.
Also, the Ministry stated that the Department of Petroleum Resources would in 2017 conduct bid rounds for open blocks and conclude the previously aborted marginal fields bid round to enhance the entry of new players, stimulate competition and generate revenue for the government.
Commenting on the score card, Vice President Yemi Osinbajo disclosed that the elimination of petroleum subsidy had removed a huge financial burden from the Federal Government.
To this end, he disclosed that the Federal Government has commenced moves to raise the country’s domestic refining capacity for petroleum products by repairing the existing refineries, licensing modular refineries and supporting the development of private-led refineries.
He said, “Recently, the Federal Executive Council approved new measures and strategies aimed at eliminating the burden of Joint Venture Cash Calls arrears and easing future payments in the upstream sector.
“The measures will boost additional investments and raise daily production levels to about 2.8 million barrels per day (mbpd).”
Speaking in the same vein, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, stated that prior to the removal of fuel subsidy, the country was losing over N1.2 trillion annually, while the issue of fuel scarcity was rampant in the country.
According to him, the elimination have led to a situation today, where refined petroleum consumption had gone down from an all-time high of 40 million litres a day to about 28 million litres a day.
Commenting on the JV Cash Call exit, Kachikwu expressed optimism that the arrangement would bring about a flurry of investments in the oil and gas industry, while it would also ensure that projects that were earlier abandoned by the International Oil Companies were revived.
The companies involved in the new cash call funding model are Shell, Nigerian Agip Oil Company, NAOC, Chevron, Total and ExxonMobil.
Kachikwu challenged the oil companies to put their money where their mouth is and increase their investments in the country.
Also speaking, Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Mr. Maikanti Baru disclosed that the JV cash call exit arrangement would help address the longstanding issues of unpaid cash call arrears, underfunding of the joint venture and the burden of monthly cash call payments by the Federal Government.
According to him, under the new funding model and governance process, the government of Nigeria would continue to receive royalties, taxes and profit from its equity share of JV oil and gas production while the cost of operation is deducted upfront.
Furthermore, the Ministry of Petroleum Resources stated that the new cash call policy is part of a new measures and strategies aimed at eliminating the burden of Joint Venture Cash Call arrears and securing future funding for the Upstream Petroleum Sector.
According to the Ministry, these strategies which are fully supported by the National Economic Council (NEC) will lead to an increase in national production from the current 2.2 mbpd to 2.5 mbpd by 2019, as well as reduction in Unit Technical Costs from $27.96 per barrel Oil equivalent (boe) to $18 per boe.
“The net payments to the Federation Account are expected to double from about $7 billion to over $14 billion by 2020 and the immediate effect of the new cash call policy will increase net FGN Revenue per annum by about $2 billion,” the Ministry said.
