Service agreement covers just 10%, says NPDC official

Silhouette of oil platform in sea against moody sky at sunset18 December 2013, Lagos – Following the spate of criticisms of the Financial Service Agreement between the Nigerian Petroleum Development Company (NPDC) and two indigenous companies, Atlantic Energy Drilling Concept and Septa, an official of NPDC said on the contrary, the working arrangement has enhanced indigenous participation in the oil sector.

The senior official, who asked that his identity be veiled, said the agreement has widened the scope of local content, expanded capacity and reach of indigenous companies, which for the first time are providing major financial muscle that NPDC lacks to ensure uninterrupted operations of the blocs.

He said contrary to reports that the two firms merely put down $50 million, the actual amount was much higher and that only 10per cent of NPDC crude and not 60 per cent was covered by the terms of the contract. The official described as phony and totally untrue, that the two firms were lifting as much as 60 per cent of NPDC crude, describing  the claim as a “figment of their imagination.”

Also reacting to the reports is an official of one of the companies who declined his name in print, but  confirmed that  $135 million is what was paid. He said $135 million was paid to NPDC and it was fully receipted, adding that the money was borrowed at interest rate, which is already affecting the companies bottom line.”

He expressed doubt that in the next five to six years the company would be unable to break even.  “We are always shocked by the figures we hear and see in the papers, they are so far from reality that sometimes we wonder whether they are referring to the actual agreement, or something else. We seriously think that our participation in this technically complex and capital intensive venture should encourage other Nigerians to venture into it,” he said.


– The Nation

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