NNPC owes JV partners $7b, says NAPIMS

01 June 2016, Lagos –International Oil Companies (IOCs) in the Joint Ventures production are being owed $7 billion by the Nigerian National Petroleum Corporation (NNPC), the  upstream investment arm of the state oil firm, Petroleum Investment Management Services (NAPIMS), has said.

NNPC-logo-335x270NAPIMS Group General Manager, Dafe Fejebor , made the revelation before the House of Representatives committees on Petroleum (Upstream) and Public Procurement which began investigation into the alleged $260 million “illegal” contract by NAPIMS.The Nation had exclusively reported that the huge debts were  owed over a period of five years.

The Nation had exclusively reported that the huge debts were  owed over a period of five years.

The contract in contention was for four single source contracts for projects in Exxonmobil’s Usan Deepwater Project, at a total value of $260 million without any form of tendering process.

He said: “In the last five years, things really started going bad and we are really trying our very best to get them resolved.

“We’ve gone to arbitration and they are trying to find aways of resolving them offline. The Minister has stepped in to see how he can mitigate our exposure.

“In short we are at crossroads because when we approached the IOCs, they simply told us that we have to operate a base case budget before they can continue with us.

“And from my understanding of business, a case base budget is doing business without growth and we have to resort to cut cost on services to survive, but some guys providing us services totally refused.”

This, he said, has necessitated the organisation’s move to cut costs.”We wrote to them to go renegotiate all services, whether ongoing or the one that they’re out to put in place, they should knock them down by 30 to 40 per cent cost reduction.

“They went to town with some,  they were successful as some gave up to fifty percent of their services,” he said, lamenting that the rig providers especially the drill ships refused to budge.

The NAPIMS chief said the move was necessary as “our cost outlay per day was $600, 000 spread, bringing our production cost per barrel to about $57 to $60 per barrel. There was no way we could continue with that.“

The joint committees headed by Hon. Victor Nwokolo and Public Procurement, headed by Hon. Wole Oke, while considering a memorandum brought before it by Tilone Subsea, directed that ExxonMobil, represented by Rotimi Olubeko, a General Manager, to rescind all decisions related to the four single source contracts for projects in Exxonmobil’s Usan Deepwater Project, that was taken after March, this year when the advert for the public hearing was placed.

Rotimi said he was not aware of the $260 million, adding that there were different contracts awarded by ExxonMobil and none was of that amount.

But the Speaker of the House of Representatives, Hon. Yakubu Dogara said its imperative that the contract be investigated.

He said: “The operations of USAN field, the subject of this hearing, is a joint venture between NNPC and Chevron. The NAPIMS is a Directorate of the NNPC charged with the responsibility of managing Nigeria government’s investment in the upstream sector of the oil and gas industry.

“It is set up to maximise return on  government’s investments through effective supervision of the JV, PSC (production sharing contract) and SC (service contract) companies, using best industry practices. Since NNPC is wholly owned by the Federal Government, the National Assembly has unquestionable legal impetus to act on this matter.

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