Nigeria Reaffirms Trade Commitment to India with $15B Oil Deal

Mark Babatunde Oct 24, 2016 at 11:30am

October 24, 2016 at 11:30 am | Money Moves

Mark Babatunde

Mark Babatunde

October 24, 2016 at 11:30 am | Money Moves

Nigerian President Muhammadu Buhari welcomes Indian Vice President Mohammad Ansari in September. Photo credit: PremiumTimesNG

Nigerian authorities have announced plans to sign a deal worth $15 billion as an advance crude oil payment from the government of India.

Ibe Kachikwu, Nigeria’s junior minister for Petroleum Resources, says the $15 billion in advance oil payments will provide some respite for Nigeria’s current cash flow problems.

According to theCable, the deal will see the Indian government make an upfront payment for the purchase of Nigerian crude, which would be repaid on the basis of firm term crude contracts over a couple of years.

Kachikwu, who made the announcement while on his three-day visit to Delhi, India, held bilateral talks with Dharmendra Pradhan, the Indian Petroleum minister, with both parties agreeing to continually explore all available avenues to strengthen the existing cordial and mutually beneficial trade relations between both countries.

A statement released by Idang Alibi, a spokesman for Nigeria’s petroleum ministry, said Dr. Ibe Kachikwu negotiated a $15 billion investment deal with the Indian government on Monday with terms yet to be agreed.

According to ThisDay

[The amount] will be repaid on the basis of firm term crude contracts over some years and in consideration for Indian public sector (PSU) companies that are 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.

Nigeria expects to fulfill its own end of the deal as it prepares itself to reap the benefits of a return to maximum production capacity, since experiencing a marked production slump due to rising militancy in the country’s oil rich Niger Delta region.

Kachikwu said Nigeria’s crude oil production is expected to climb by 22 percent to 2.2 million barrels per day from its current production of about 1.4 million barrels per day.

He hopes the oil companies will lift the force majeure for some of the country’s most productive oil fields by December or January of 2017.

Nigeria remains one of India’s biggest trading partners in Africa. The majority of that trading comes from the sale of crude oil, with 12 percent of India’s total crude oil imports coming from Nigeria.

Official figures put the volume of crude oil trade between Nigeria and India between 2015 and 2016 at about 23.7 MMT of crude and more than 2 MMTPA of LNG imported from Nigeria.

 

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