President Muhammadu Buhari has approved the termination of $1.3 billion contracts and restructuring of the controversial strategic alliance agreements held with Atlantic Energy.
The deals were signed by former Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke.
Former Governor, Central Bank of Nigeria (CBN), Lamido Sanusi, had alleged that the Atlantic’s deals issued by Alison-Madueke were one route through which tens of billions of dollars in oil revenues were diverted from state finances.
Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who revealed this in an interview with Reuters, said that the Nigerian National Petroleum Corporation (NNPC) was expected to conclude a deal within two months for a new partner to pay up to $1.3 billion to take over the Atlantic agreements.
This is to raise funds for oil blocks sold by Royal Dutch Shell. “I’m saying to Atlantic, sorry, you’re out because there’s been a breach,” he said.
“Whoever comes in has to give a sign-in fee almost equivalent to what I’ve lost… we’ll have a massive increase in volume out of those fields, we’re going to have 150,000 to 200,000 bpd from the current 40,000 to 50,000 bpd.”
Kachikwu, who doubles as Group Managing Director of the NNPC, said the corporation would concession the four refineries, the pipelines and depots across the country.
The corporation, according to Kachikwu, was in talks with oil majors such as Italy’s Eni and oil traders, Vitol and Gunvor, seeking partnerships to revamp these assets after decades of neglect.
Cash-strapped for years, the assets reported a loss of N267.14 billion ($1.3 billion) for 2015. “My ideal would be to bring in third party capital, do a joint investment and management of the refineries and work out a pay-out process over five to six years, basically on lifting of some portions of the finished products,” Kachikwu said.
He added that government would also advertise concessions for pipelines and depots next month. Government, according to Kachikwu, is also in talks with oil majors and banks to raise capital for new drilling and to repay up to $4 billion in debt that the state oil firm has accumulated over years of mismanagement.
The minister said that he wanted to increase output to up to 2.5 million barrels per day by the end of 2016. Currently, the Organisation of the Petroleum Exporting Countries (OPEC) member pumps 2.3 million bpd. Buhari has made reforming the oil sector a priority as a slump in oil prices hammers the economy.
The president has fired the NNPC board and appointed Kachikwu to overhaul a company whose opaque structures have allowed corruption and oil theft to flourish.
Kachikwu said debt, as of November, stood at $3.5- $4 billion, which NNPC wanted to cut through deals such as a $1.2 billion multi-year drilling financing signed with Chevron in September.
“The target is that over 2017, we’ll begin to look at zero,” he said in an interview, referring to debt and the goal of ending the need for JVs to depend on NNPC cash.
