The Chairman, Petroleum Technology Association of Nigeria (PETAN), Bank-Anthony Okoroafor has described the cash call exit regime as the best thing to have happened to the oil and gas service delivery firms in recent times.
Nigeria’s oil and gas production structure is split between the Joint Venture (onshore and shallow waters, with foreign and local companies) and Production Sharing Contracts in deep waters.
Under the JV arrangement, both the Nigerian National Petroleum Corporation, NNPC and private operators contribute to the funding of operations in the proportion of their equity holdings and generally receive the produced crude in the same ratio.
But over the years, the NNPC has failed to meet its share of cash call obligations, and the chronic JV funding shortfalls resulted in declining production levels and inability to honour payments.
Speaking in an exclusive chat with Orient Energy Review during the Offshore Technology Conference in Houston, Texas, Okoroafor who said, “Being owed by companies is now a thing of the past because of the cash call exit arrangement by the state-owned NNPC. This has improved the confidence of government’s partners in the business and production has since soared”.
In his words, “the exit of cash call was a good thing because I remember those days, you do services and you never get paid and when you ask the companies, they say they are waiting for the cash call. This is one of the best things that have happened in this industry.
“Now before any of the companies execute or give you a job order or purchase order, they plan for it because they have the money.
“So, we are no longer worried about any issue, nobody will give excuses on payments because of the Cash Call,” he said.
Speaking further, he said “inadequate exploration of untapped opportunities is why the country has rich potentials but poor in reality”.
He went on to comment on co-operation among African countries, saying “Regional integration is good. You will discover that a major part of Africa do not have access to electricity. Now, imagine if we could harness all these gas being flared and use it to provide electricity to the entire continent. Regional integration by African countries is key to its development”.
“Imagine if we could refine most of our crude and sell to the entire continent, there would be so much money on the table”, he added. He also acknowledged the existence of barriers and national laws that limits the level of possible regional integration, citing it as a topical issue to be deliberated in WAIPEC 2019.
“We just need strong will and strong infrastructural investment. When I look at the statistics, what I see are the opportunities. Imagine 75 per cent not having access to electricity and we are busy flaring gas!” he added.