The agreement was signed in Abuja at the Ministry of Petroleum Resources between the Federal Government and Shell, Chevron, Agip, Total, Oando.
Nigeria owes an estimated $6.8 billion accumulated over 14 years but got a discount of $1.7 billion, leaving a debt of $5.1 billion to be repaid.
The Minister had, at another forum, explained that the agreement stated that the payment from incremental oil production would not affect Nigeria’s budget production benchmark of 2.2 million barrels per day (mbpd).
The Minister of State for Petroleum, Ibe Kachikwu, who signed on behalf of the Federal Government, expressed joy that the signage would bring more investments into the country.
He said lots of work and political determination had gone into the nation’s exit from the JVC debt.
”If we continue to focus on things that haven’t worked in a long while, we’ll get this industry on its way to competing favorably with other counterparts.
”I challenge the oil companies to put their monies where their mouth is because they said once this is done investments would begin to come into the country.
”I must also appreciate President Muhammadu Buhari for supporting the effort and for his willingness to steer the cause,” Mr. Kachikwu said.
Maikanti Baru, Group Managing Director of the NNPC, said the agreement was aimed at addressing long standing issues of unpaid cash call arrears, under-funding the joint venture and the burden of monthly payments by the Nigerian government.
He said inability of the NNPC to regain technical costs had been a major reason for the accumulation of the arrears over time.
Baru said under the new funding model, government would continue to receive royalties, taxes and profit from its equity share of Joint Venture oil and gas production.
He said signing of the agreement would restore investor confidence and provide opportunity for NNPC and joint venture partners to easily raise capital to finance oil and gas operations.
Clay Meff, the Chairman of the Oil Producers Traders Section (OPTS), lauded the minister for making the resolve his top priority.
”It’s a landmark, milestone, a positive step. JVC will increase investor confidence and increase investment in the future.
International Brent crude oil futures were trading at $54.22 per barrel at 0114 GMT, up 20 cents, or 0.37 percent from their last settlement.
U.S. West Texas Intermediate (WTI) crude futures were up 24 cents, or 0.47 percent, at $51.14 per barrel.
The slightly higher prices came after Kuwait, a member of the Organization of the Petroleum Exporting Countries (OPEC), notified customers that it would cut supplies from January as part of an effort by OPEC and other producers led by Russia to cut production by almost 1.8 million barrels per day (bpd) in order to reduce a fuel supply overhang that has dogged markets for over two years.
Kuwait Petroleum Corporation (KPC) already said on Tuesday that it had officially notified its customers of a cut in their contractual crude oil supplies for January, in line with a deal with OPEC to reduce production.
Traders said that market prices rose as KPC appeared to be cutting supplies more than initially expected.
“Prices recovered as news emerged that Kuwait was said to be making bigger production cuts to U.S. and European customers,” ANZ bank said on Friday.
Most exporters have a so-called operational tolerance under which they can reduce or increase their contracted exports to clients with little notice.
Market sources said that KPC had informed clients that it was cutting supplies beyond the operational tolerance.
Additional Source: Reuters news