It has not been a god commentary for the Nigerian National Petroleum Corporation (NNPC) as business reports from its partners in the petroleum industry blame it for funding drawbacks and low performance.
The corporation which holds some 60 percent overriding interests in most of the joint venture deals operated by private oil firms in the country has proved to be a veritable excuse for unimpressive balance sheet.
All the operators ranging from Shell, Seplat, Chevron, Mobil and Agip have the same story of crippling cash call arrears.
Mobil Producing Nigeria Unlimited, operator of the nation’s second biggest joint venture, accused the corporation of defaulting in meeting its cash call obligations under the joint venture (JV) agreement.
Manager, Field Law Services, MPN, Mr. Omojuwa Oteri, stated that the development was threatening activities in the oil and gas sector in Nigeria.
According to Energy News online, Oteri, who spoke at a business review session after the presentation of the 2015 Energy Outlook series held in Uyo, Akwa Ibom State, said the company’s operation has experienced a 53 per cent decline because of the failure of the NNPC to honour its cash call obligations.
He said the US oil giant started experiencing a decline in its production activities 10 years ago due to the non-release of 60 per cent cash call arrears by the JV partner.
“Our joint venture production over the last 10 years had been declining up to about 53 per cent. This is mainly because of our joint venture partner’s failure in several instances to honour their cash call obligations to the business,” he said.
Oteri explained that the federal government, which is represented by the NNPC, is meant to contribute 60 per cent in the joint venture while Exxon- Mobil pays the balance of 40 per cent.
He said the failure of the NNPC to pay obligations to the JV had impacted negatively on investments outlook and profitability of the business.
“In addition to this problem, we now find a global trend where the price of oil is right now closed to $40 per barrel. This affects profitability of our business and outlook for investments,” he stressed.
The ExxonMobil manager maintained that the oil major was suffering from difficult times due to falling oil prices and non-payment of cash call obligations from partners.
He said another area he would call for understanding and cooperation because of the difficult business environment is in the area of Nigeria content application or development. “It is difficult period for the industry,
it is difficult period globally and it is a difficult period for us locally.”