Lagos — Nigeria's efforts to reduce debt owed to its foreign oil partners is progressing well and is helping the country bolster exploration and production, state-owned Nigerian National Petroleum Corp. said Tuesday.
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"So far, we have repaid over $1.5 billion out of the $5.1 billion cash call arrears to date," NNPC group managing director Maikanti Baru said in a statement. "This has not only restored the confidence of international oil companies and our joint venture partners, but has also led to improved reserves growth and crude oil production."
The Nigerian government, through the NNPC, holds an average 57% equity in joint ventures with international oil companies including Shell, ExxonMobil, Chevron, Total and Eni. They account for between 85% and 90% of Nigeria's 2 million b/d of oil production, including condensate.
Nigeria owed the foreign partner companies $6.8 billion in counterpart funding -- known locally as cash calls -- as of 2016, forcing the government to renegotiate the debts and adopt a new funding mechanism for upstream ventures by late 2016.
According to Baru, Nigerian oil production has also been bolstered after NNPC was able to reduce the contracting cycle for upstream operations from 24 months to nine months, "with a strong commitment to further reduce the process to less than six months in the months ahead."
Industry officials and analysts said apart from the relative peace in the Niger Delta, Nigeria's commitment to settling its cash call debts in the last two years has helped to boost production.
"Certainly, because the government is meeting cash call payments regularly and paying up old debts owed to joint venture partners, oil companies are more confident now,'' Nigeria-focused energy analyst Abiodun Adesanya said.
Nigerian oil output including condensates has rebounded to around 2 million b/d this year after the African producer received a timely boost with the startup of the offshore 200,000 b/d Egina Field. The country is aiming to push production to 2.3 million b/d in 2019.
-- Newsdesk-Nigeria, firstname.lastname@example.org
-- Edited by Jonathan Fox, email@example.com