IOCs not oppose to $5bn oil debt deal

International Oil Companies (IOCs) operating in Nigeria have said that they are not opposed to the  $5 billion oil  debt deal  with  the  Federal Government, as it will encourage  them resume  operations   in some  of  the abandoned  projects  and  boost their confidence in the government.

Industry sources  said  that  before the  government  came out to make  it  public  that  it  had agreed  to pay the  amount  mentioned, a lot of paper works    acceptable  to both  the government and  IOCs would  had taken  place.

  A source close to one  of  the IOCs  told BusinessDay that for months the  government  and  the IOCs  had been discussing this  issue  before they arrived at an acceptable solution. He said the discussions included how the money would be paid and how much to be paid.

 On whether the  government adopted  the  Incorporated  Joint  Venture (IJV)  option, he said  it  was up  to the  government  to decide which  alternative  funding model  it would want  to  go for.

 Another source  said there were  no indication  that  the deal was not acceptable  to the  IOCs. He said however that they insisted that the government must pay some money to show its commitment to the agreement.

 Commenting on the  IJV also, he said the  problem currently  plaguing  that  idea was  the issue  of corporate  governance, adding that unless  that was sorted  out  the  IJV might not work.

He said the  good  thing about this development  was  that the vital  investment   from which  the  companies  had backed out because of   the  failure  of the government  to pay its  own  cash  call might soon be revisited.

Nigeria’s crude oil production from the Production Sharing Contracts (PSCs) with the IOCs has grown by over 700 percent in the last 10 years, because government is not involved in the funding of the projects.