In the wake of continuing cash flow challenges facing the country, the Federal Government has agreed a deal with India for the supply of crude oil with the Asian country paying $15 billion upfront.
The deal which was negotiated by the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu in India yesterday is expected to be signed after the fine details have been worked out.
A statement by the Ministry of Petroleum Resources in Abuja explained that the $15 billion from India will be repaid on the basis of firm “Term Crude Contracts over some years and in consideration for Indian public sector companies collaborating in the refining sector as well as exploration and production activities on a government-to-government basis by Indian PSU Companies, long term contracts for supply of crude to Indian PSU companies from Nigeria and also possibilities of executing CGD and LPG infrastructure projects by Indian PSU companies in Nigeria”.
Kachikwu who is currently on a three-day visit to India, concluded talks on the investments in a bilateral meeting with his Indian counterpart in charge of Petroleum and Natural Gas, Shri Dharmendra Pradhan.
The statement added that both ministers noted the existing and significant engagement between the two countries in the hydrocarbon sector, while acknowledging that Nigeria was one of the largest trading partners of India in Africa which is dominated by import of crude oil and gas from Nigeria.
Also in India, Kachikwu disclosed that Nigeria expects its oil production rate to jump by 22 percent by the year-end to 2.2 million barrels per day (bpd) from current levels.
He expressed the hope that a force majeure on all its oil fields would be lifted by December or January.
“Nigeria has a bit of a cash flow problem right now. Our reserves are not as strong as we want them. The impact of that is the value of the Naira is coming down. So what we are trying is to leverage on the assets we have to receive immediate cash”.
He explained the Organization of the Petroleum Exporting Countries, which has agreed to cut world output to rescue prices, has however allowed a production window of 1.8 million bpd to 2.2 million bpd for recession-hit Nigeria.
Kachikwu, who said oil prices would rise from current levels by December, noted that he met with Pradhan to discuss expanding energy ties between the two countries.
In the last fiscal year ended March 31 Nigeria accounted for nearly 12 percent of all crude oil imports by India, one of the fastest growing economies and energy markets in the world.
“We agreed on significant potential for diversifying (India’s) engagement in to E&P (exploration and production), refinery building & marketing in Nigeria,” Pradhan said in a tweet.