PENGASSAN queries NNPC’s failure to fund JV operations with oil firms

The bill was yet to be passed 12 years after stakeholders’ arguments and counter-arguments over its importance

Workers in the oil and gas industry have raised concern over the continued inability of the Federal Government through the Nigerian National Petroleum Corporation (NNPC) to contribute its counterpart funding in the operations of Joint Ventures (JV) with the oil companies.

Emmanuel Ojugbana, public relations officer, Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), who raised the issue while speaking in Lagos, said government’s failure to fund JV operations and arrears of indebtedness to oil companies in cash call were taking its toll on JV between the NNPC and oil companies, which accounted for more than 60 percent of Nigeria’s crude oil production.

He said: “The JV structure is an average of 55 percent for the NNPC and 45 percent for private oil companies. Unfortunately, despite the fact that NNPC has a larger chunk of the proceeds from the JVs, it has always been defaulting in payment of its own counterpart funding of projects.
“Exploration activity has been greatly recessed by the challenge of funding the operating budget and cash call obligations. Over 50 percent cut in JV funding and irregular release of cash call have made the operators to scale down on the whole spectrum of the E&P operations.

“Oil companies are owed billions of dollars in cash call arrears, putting the jobs of our members and other workers in the industry in jeopardy as companies easily rationalise disengagement of staff and reduction in welfare packages as being due to lack of funds based on outstanding funding arrears.”

He further clarified that the lack of funding of the JV operations translated to reduced work programmes by the oil companies, which mean reduction in re-investment and on a larger scale revenue to the federation.

“There is depletion in national reserves due to lack of exploration activities, as many fields are yet to be developed by International Oil Companies (IOCs) due to lack of funds, which extrapolate to decrease in what is accruable to the national coffers if we could harness this untapped wealth,” he said.