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With a new funding arrangement for the joint ventures with international oil majors, Nigeria expects its crude oil production to rise to 2.5 million bpd by 2019, from 2.2 million bpd capacity now, the Ministry of Petroleum Resources said in a press statement posted on Facebook on Wednesday.
Nigeria paid last week the first US$400 million payment it owes to the international oil companies (IOCs) for the outstanding joint venture cash calls. That payment was part of a cash call debt owed to the majors in 2016, Nigeria’s Oil Minister Emmanuel Ibe Kachikwu said at the Offshore Technology Conference in Houston on Tuesday, the ministry’s statement says.
Nigeria signed a deal in December 2016 with Shell, ExxonMobil, Chevron, Total, and Eni, under which the country would exit the so-called cash call system of contributing money to fund its equity in the joint ventures. Back then, the Nigerian National Petroleum Corporation (NNPC) said that according to minister Kachikwu, “the consensus in the industry is that with the signing of agreements to exit cash calls, investments would soon flow into the Nigerian Oil and Gas Industry.”
“The sustainable funding of the JVs will lead to an increase in national production from the current 2.2mbpd to 2.5mbpd by 2019, while the immediate effect of the new cash call policy will increase net Federal Government Revenue per annum by about $2 billion,” the Nigerian oil ministry said in today’s press statement.
Still, Nigeria’s current production is not exceeding 2 million bpd, and currently sits at around 1.9 million bpd, including 350,000 bpd in condensates, S&P Global Platts has estimated. OPEC’s secondary sources pegged Nigeria’s crude oil production at 1.545 million bpd in March, down from 1.575 million bpd in February.
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Nigeria plans to increase its crude oil output by the summer. The country is planning to complete repair work on the Forcados pipeline and maintenance at the Bonga field by July. Following these, crude oil production should rise to 2.2 million bpd, from 1.27 million bpd in March. The March crude oil output was affected by maintenance at Bonga, which produces 225,000 bpd.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.