The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu said the Nigerian National Petroleum Corporation (NNPC) has commenced discussion with oil majors and banks to raise capital for new drilling and to repay up to $4 billion in debt.
According to Dr. Kachikwu, also the Group Managing Director of NNPC, the state oil company accumulated the debt over years of mismanagement. Nigeria currently pumps 2.3 million barrels a day but Kachikwu told Reuters that he wants to increase output to up to 2.5 million barrels a day by the end of 2016.
The minister said as of November NNPC debt stood at $3.5 billion to $4 billion, which the corporation wants to cut through deals such as a $1.2 billion multi-year drilling financing signed with Chevron in September.
He said:
“The target is that over 2017, we’ll begin to look at zero.
“My ideal would be to bring in third party capital, do a joint investment and management of the refineries and work out a payout process over five to six years basically on lifting of some portion of the finished products.”
NNPC has been in talks with oil majors such as Italy’s Eni and oil traders Vitol and Gunvor, seeking partnerships to revamp assets such as refineries after decades of neglect. The NNPC reported a loss of N267.14 billion ($1.3bn) for 2015 after being cash-strapped for years.
President Muhammadu Buhari has made reforming the oil sector a priority as a slump in oil prices batter the Nigerian economy. He fired the NNPC board and appointed Kachikwu to overhaul NNPC whose opaque structures allowed corruption and oil theft to flourish.
