8.4 C
New York
Wednesday, April 17, 2024

FG owes NNPC $8.1Billion In Gas Subsidies

Published:

LATEST NEWS

- Advertisement -

An official says the Nigerian government owes its state-run oil firm more than $8.1 billion in gasoline subsidy payments. This comes as China Petrochemical Corporation says it will buy a 20 percent stake in an offshore Nigerian field from French explorer Total SA for about $2.5 billion. The OML 138 block includes the Usan field, which started output in February, Paris-based Total said yesterday. The deal, which is expected to complete by the end of the year, will give Sinopec Group, as the Beijing-based company is known, 36,000 barrels a day of oil production when the field reaches maximum output, according to analysts at RBC Capital Markets.

The Nigerian National Petroleum Corporation official, who insisted on anonymity because of the sensitivity of the matter, said Tuesday that the debt is straining its ability to import gasoline.

Despite producing about 2.4 million barrels of crude oil a day, Nigeria imports most of its gasoline because its refineries are unable to meet the nation’s demand.

The official said the debt has added to the corporation’s financial burden after private companies stopped importing earlier this year.

He said the corporation, which used to account for 60 percent of Nigeria’s imports, now accounts for all of them.

Nigeria’s finance ministry could not immediately be reached for comment Tuesday.

total

The Total SA company sign is seen outside their headquarters in the La Defense business district in Paris

Meanwhile China’s state-backed energy companies are seeking new oil and gas reserves abroad to feed the world’s second-largest economy, especially from regions like Africa where government scrutiny is lighter than in North America or Europe. The deal with TOTAL is the largest for Sinopec Group since its traded unit bought 30 percent of Petrogal Brasil for $4.8 billion last year.

READ ALSO  New Anambra Fire Chief Concludes Facility Tour, Tasks Officers on Proactiveness, Hardwork

Sinopec is paying up to secure the oil at Ulsan, analysts said. The asset has a net present value of $2.1 billion, suggesting an “attractive price” for Total, RBC said in a note to clients yesterday. Beijing-based Sinopec is paying $21.93 a barrel for each barrel of oil equivalent in the block, twice the industry average over the last five years, analysts at Sanford C. Bernstein & Co. said.

The asset accounts for about 10 percent of Total’s Nigerian output, which averaged 287,000 barrels a day last year. The sale to Sinopec, as the state-backed Chinese refiner is known, is part of Total’s plans to complete $15 billion to $20 billion of asset disposals from 2012 to 2014. Total didn’t say which company will assume its role as operator.

Growth Opportunities

“The transaction is aligned with Total’s active portfolio management,” Yves-Louis Darricarrere, head of exploration and production, said in today’s statement. This “will allow us to focus our resources on the material growth opportunities in Total’s portfolio.”

China’s state-owned oil companies may end up with a 40 percent holding in the block because Nexen Inc. (NXY), which has 20 percent, is subject to a $17.4 takeover bid from Cnooc Ltd. (883) The other partners are Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX)

READ ALSO  Federal Cooperative College Oji River Holds 26th Matriculation Ceremony

The Usan field production, where the ramp-up was slower than expected, may reach 140,000 barrels a day by the end of 2012, Chief Financial Officer Patrick de la Chevardiere said in July. Total expects a peak rate of 180,000 barrels a day.

Sinopec Group has also approached the French oil company Etablissements Maurel et Prom, which operates in Gabon, about an acquisition, people familiar with the matter said this month. The company said in January that it will seek to produce 50 million metric tons of crude a year overseas by 2015. Last year, foreign production was 23 million tons.

Nigerian Assets

Total’s sale of the Nigerian assets comes as the explorer is under pressure to raise output after this year’s production has been hurt by a natural-gas leak at the Elgin platform in the North Sea. The company has warned fourth quarter output could also be affected by flooding and offshore maintenance in Nigeria.

Total said in September it expects to increase output by an average of 3 percent a year from 2011 to 2015. It has also set a longer-term target of reaching about 3 million barrels of oil equivalent a day in 2017.

Hey there! Exciting news - we've deactivated our website's comment provider to focus on more interactive channels! Join the conversation on our stories through Facebook, Twitter, and other social media pages, and let's chat, share, and connect in the best way possible!

Join our social media

For even more exclusive content!

spot_imgspot_imgspot_img

Of The Week
CARTOON

TOP STORIES

- Advertisement -

Of The Week
CARTOON

247Ureports Protects its' news articles from plagiarism as an important part of maintaining the integrity of our website.