Nigeria’s Joint Ventures (JV) oil production has crashed rapidly from 2.2 million barrels per day (bpd) to 1.2 million bpd, translating to a decline of 900,000 barrels daily.Also, the country risks 27 per cent further JV output decline in next five years.
Managing Director, SEPLAT Petroleum Development Company Plc., Mr. Austin Avuru, revealed these at the ongoing Offshore Technology Conference (OTC) in Houston, Texas, United States. He said that the only reason that the shortfall was noticed is that the country’s deep water production is still making up for the gap. Blaming the JV production deep on challenge of contracting cycle, cash calls arrears and JV funding, Avuru tasked all stakeholders to address the issue immediately.
“In the next five years, our deep water production will also be declining and the real impact of poor funding of the JV will start to manifest when, as a nation, we will be producing not more than 1.6 million bpd. So, we must begin to address the challenges by doing the right thing.” He urged the government to design a structure that would give each JV sufficient operational and financial independence.
He said: “JV today is a producing venture and if the minority is able to fund its shared operation from its revenue, why wouldn’t the majority party be able to do same? The structure of the JV and the JV agreement allows for the selffunding mechanisms.
“Once their budget is approved for the year, it will require no new legislation other than the minister and the Group Managing Director of the Nigerian National Petroleum Corporation (NNPC) to have the courage and allow the JV to be self-funding autonomy.”
Avuru stated that in 1980s when the JVs were being handled by the JV Department (now NAPIMS), the General Manager, JV, will sign the cash call request and the Governor of the Central Bank of Nigeria (CBN) will approve immediately.
The SEPLAT Petroleum boss said: “Gradually, the system just got so elastic and everybody wants to be involved in the JV operations to the point that the cost of operations is now being legislated for by the National Assembly. “However, fortunately, the government has agreement to work on contracting cycle.
In some cases, it gets to 24 months and most recently, everybody forgets a contract is being processed and the job never gets done. “If you borrow for a contract and you have to wait for two years to get approval, the interest rates would have added to the cost.
If these challenges can be addressed, we will reduce cost by 40 per cent in the next five years.” It would be recalled that the Federal Government, through the Minister of State for Petroleum Resources and Group Managing Director, NNPC, Dr. Ibe Kachikwu, had charged all agencies involved in the contracting process such as NCDMB, NAPIMS and operating companies to work together and develop a common industry contracting procedure that will reduce the contracting processing time to six months.
Meanwhile, the Nigeria’s annual trade with Houston, an oil city in Texas, hit $15 billion in 2015. The Mayor of Houston, Sylvester Turner, said that the oil and gas trade between Nigeria and Houston is a success story because of their close ties.
Mayor Turner stated this in his special message to Nigeria’s Small Medium Enterprises (SMEs) and Houston’s Original Manufacturers (OEMs) at the 2016 Nigeria Content Investment Forum event yesterday. He explained that the existing close ties between Nigeria and Houston has made many oil companies having office branches or associate in Nigeria.
“As at today, 330 Houston companies have businesses and trade connection with Nigeria,” Turner said, noting that Houston is ranked as Nigeria’s largest US gate way for international trade and for greater partnership.
To further strengthen Houston/Nigeria oil and gas trade, the Houston Mayor said in 2011, United Airlines opened a direct flight in Nigeria from Houston to Lagos, linking two major energy cities. “This flight has already promoted robust connections. Houstonians and Nigerians alike have benefited greatly from this connection,” he said.
