Emmanuel Onuorah, chairman, Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), speaking on behalf of the association, has urged the federal government to review the current funding arrangement for the Nigerian National Petroleum Corporation (NNPC) joint venture (JV) operations with the international oil companies (IOCs) in view of the corporation’s huge indebtedness to the oil majors.
He also maintained that alternative funding for the JVs operations with NNPC will address the funding challenge, which has adversely affected their operations over the years.
Onuorah listed the alternative ways of funding the JVs to include incorporated joint ventures (IJV) modeled after the Nigeria Liquefied Natural Gas (NLNG); traditional JV with government reducing its interest; service contract with oil firms as contractors, and tax-based system where government detaches itself totally from operations in the sector and raise revenue from taxation.
He said the suggested alternatives, if applied, would enable government and NNPC to resolve the issues concerning the huge debts owed the oil companies because of the government and NNPC’ inability to pay their own counterpart funding of JV operations.
He, however, noted that JV between NNPC and oil firms accounts for more than 60 per cent of Nigeria’s crude oil production.
Onuorah also canvassed that security personnel should be adequately empowered to be able to checkmate crude oil theft and pipeline vandalism.
He pointed out that crude oil theft has deprived Nigeria huge income, adding that the government should equip the security forces to fight crime in the industry.
“The nation is losing about 250million barrels per day (bpd) and 400 million bpd of crude oil to theft and pipeline vandalism. This is the combined production of Ghana, Gabon and Equatorial Guinea.”
He also noted that what was lost as revenue if the crude oil price is put at an average of $60 per barrel, will translate to between $15 million and $25 million respectively.
“As a major stakeholder in the industry, we lament the huge loss, which could have been deployed into critical areas of national development,” Onuorah said.
He posited that huge unbudgeted costs are being incurred to repair damaged or vandalized pipelines and advised the government to put a stop to the menace urgently.
In the meantime, a coalition of civil society organizations have advised the federal government to quickly initiate a phased divestment of its shares in the JV operations, pointing out that the huge cash call debt obligation, which the JV has imposed on Nigeria was enormous.

Johnson Alabi
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