Nigeria pays oil majors $3bn, inching closer to ending obligations

*Debt of $2.3 billion to Exxon fully cleared, Nigeria still owes $1.7 billion to oil majors, says NNPC

Isola Moses | ConsumerConnect

Nigeria has compensated the international oil companies (IOCs) operating in the country, including Exxon Mobil Corporation and Royal Dutch Shell Plc $3 billion, thereby moving closer to clearing the operating expense arrears owed since 2010.

The Nigerian National Petroleum Corporation (NNPC) in a statement disclosed that the payment is being settled through a five-year crude oil sales deal agreed in 2016.

Whereas 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.

According to the statement, the payment details are as follows:

PAID AS OF AUGUST                    OUTSTANDING

Exxon             $2.3b                          None

Shell               $455m                        $917m

Chevron         $1.04b                        $55m

Total               $307m                        $304m

Eni                  $390m                       $385m

The state oil firm October 15 had 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 may finally be turning a corner with profit and cash, an agency report said.

That’s good news for Nigeria’s oil industry, which generates about half of all government revenue.

However, report states that like oil companies around the world, the NNPC is also faced with weak global demand because of the outbreak of the Coronavirus pandemic and new restrictions to contain the virus.

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