The Federal Government is reported to have reached an ‘outline settlement’ worth $5 billion with five international oil companies to cover outstanding payments for joint exploration and production.
A report by the Financial Times said on Tuesday that agreement which is expected to be completed before the end of the year is expected to cover payment defaults from 2010 to 2015.
The Minister of State Petroleum Resources, Dr. Ibe Kachikwu said Royal Dutch Shell, Exxon Mobil, Italy's ENI, Chevron and France's Total had "accepted" the $5 billion deal, according to the FT's website.
Shell and Chevron declined to comment in response to enquiries by Reuters. The others were yet to respond.The payments would be made in the form of new oil production, the FT said, quoting the minister and "people close to Western companies". There would also be a one-off cash payment.
The agreement would hopefully be finalised by the end of the year and cover the period from 2010 to 2015, the paper said.
Kachikwu has been trying to reduce the financial obligations for more than a year.
The delay in payments has hindered oil and gas investment in the West African nation and worsened a budget crisis as the government seeks to increase spending to drag Africa's biggest economy out of recession.
Nigeria's oil and gas output had been relatively stagnant for years, until militants started a wave of attacks in January to fight for a greater share of oil revenues.
NNPC’s Group Managing Director, Dr. Maikanti Baru had said recently in Port Harcourt that the corporation will no longer rely on the federal government to fund Joint Venture Cash Calls.
Baru said the corporation plans to exit current the cash calls arrangement which will ensure it does not have to go the treasury every month for cash call funding.
In a series of twits @NNPCgroup, Baru who spoke at Umblical Flow-lines and Risers (UFR) for the Egina Deep Offshore Project by Saipem Contracting Nigeria Limited, in Port Harcourt, said the Joint Venture Cash Call is part of its 12 Focus Business Areas.
He said: “Under this important business focus area, we will also create a sustainable and long term plan for JV funding. PPT rate at 85 percent for JV while royalty varies between 18.5-20% of gross revenue”.
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