NNPC renegotiates commercial contract terms with major oil firms

The Nigerian National Petroleum Corporation (NNPC) is renegotiating commercial contract terms with major oil firms, in a move to keep investment flowing into a sector crucial for the country’s economy.

Mele Kyari, group managing director (GMD) of NNPC, on Friday, told Reuters in an interview.

Meanwhile, oil companies such as Royal Dutch Shell, ExxonMobil, Total and Eni, are cutting billions in spending after taking hits to their profits, shifting money to renewable fuels and focusing only on the most cost-effective markets.

Kyari said the new commercial terms being negotiated would be finalised before the petroleum industry bill (PIB) — a pending long-awaited oil overhaul bill, is passed.

“No company will invest where they cannot get the appropriate margin,” he said.

“We’re very conscious of the fact that people have choices, companies will make choices to leave countries when they have to.”

He said companies would have the option of the newly negotiated commercial terms or moving to the updated terms outlined under the new law.

He also said that by end of June 2021, the corporation is planning to secure $2 billion financing to overhaul its Warri and Kaduna refineries.

The GMD said talks are underway on financing repairs to the Port Harcourt refinery after a pre-finance bid for more than $1 billion was oversubscribed, adding that the money will be repaid in profits and fuel cargoes from the refineries, rather than in oil cargoes.

Nigeria’s four refineries have not operated at full capacity for years, prompting NNPC to shut all of them completely in 2020 as it await much-needed maintenance, repair and upgrades, leaving the refineries with a hefty fuel import bill.