02 February 2017, Abuja – The Federal Government’s recent exit from the joint venture cash call agreement it had with international oil companies operating in Nigeria will boost the country’s revenue and increase investment in the industry, if adequately implemented, experts in the oil and gas sector have said.
According to them, the cash call exit and the recently unveiled oil and gas policy documents will significantly enhance the country’s income from crude oil if implemented properly.
The experts spoke at the 2nd MSc degree graduation and award ceremony for members of the 2016 graduating class of the Emerald Energy Institute for Petroleum, Energy Economics, Policy and Strategic Studies, University of Port Harcourt, Rivers State.
In the speech made available to our correspondent, the Director, EEI, Uniport, Prof. Wumi Iledare, said the exit of the JV cash call agreement was long overdue and that the development would ensure increased revenue generation for Nigeria in the near future.
He said, “Nigeria has a dynamic local content policy that has become a case study for emerging petroleum producing provinces in Africa; and the newly launched oil and gas policy documents and prospective fiscal reform efforts certainly offer significant rays of hope for the industry.
“It is also more likely than not that the JV cash call exit agreement will boost investments and revenue for the government if properly implemented with realistic cost benchmarking.”
In December 2016, the Federal Government announced its exit of the JV cash call arrangement it had with the IOCs operating in the country for more than four decades.
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, who announced the termination of the cash call agreement in Abuja, also said the government was exiting them with an outstanding debt of $5.1bn.
He, however, noted that the debt would be paid over a period of five years through incremental oil production volumes.
The minister also explained that under the new arrangement, the Federal Government’s revenue was expected to increase by $2bn annually, while Nigeria’s oil production would rise to 2.5 million barrels per day by 2019.
Also speaking on the benefits of the cash call exit to Nigeria at the EEI graduation ceremony in Port Harcourt, a former Special Adviser to the President on Petroleum, Dr. Emmanuel Egbogah, said the initiative was earlier captured in the Petroleum Industry Bill that was put together by his team.
“The benefits of exiting the joint venture cash call arrangement are enormous for Nigeria because often the government fails to meet its own obligation in the agreement. This was captured in the PIB that was prepared by my team when I was an adviser to the President on petroleum,” he said.
Giving brief insights into the 2016 EEI MSc programme, Iledare said it required 400 contact hours of lectures on the University of Port Harcourt campus and about 400 private study hours when out of campus before graduation.
“Permit me to say that the graduating students you see here today have satisfactorily gone through the EEI unique process and are indeed ready to take their places in the workplace as certified energy professionals,” he said.