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CNNMoney.com: UPDATE: NNPC,Majors ‘Very Close’ To Deal On Funding Gap

March 03, 2008: 11:59 AM EST

LONDON -(Dow Jones)- State-owned Nigerian National Petroleum Corporation, or NNPC, is “very close” to striking a deal with oil majors on a $8 billion in funding gap, a senior NNPC manager said Monday.

A deal could help the resumption of critical oil investments in Nigeria after NNPC delayed payments of its share of funding in joint-ventures with foreign majors and hindered new developments as a result.

Speaking to Dow Jones Newswires, Levi Ajuonuma, NNPC’s group manager for public affairs, said Nigerian officials were currently holding meetings in London with Royal Dutch Shell PLC (RDSB.LN) on the matter.

Shell is the largest foreign oil major in Nigeria, aided through its 30%- owned, operated joint-venture Shell Petroleum Development Co., or SPDC.

A Shell spokesman said the talks were making “good progress” and he had received “positive signals” on the matter but declined to comment further. He said he was unaware of the London meetings.

Last week, Nigerian presidential adviser Rilwanu Lukman said the funding gap for NNPC represented $3 billion for 2007 and that it needed a further $5 billion for 2008. He said part of the gap would be filled by temporary loans provided by the majors.

Total SA (TOT), Chevron Corp. (CVX), ENI SpA’s (E) unit Agip and Exxon Mobil Corp. (XOM) also have stakes in Nigerian joint-ventures.

One person familiar with Nigeria’s oil business said some geologists and drilling contractors had not been paid for months by SPDC as a result of the funding gap.

The Shell spokesman confirmed “the whole system is suffering” from NNPC’s funding gap, resulting in delays in the payment of contractors.

NNPC’s Ajuonuma said: “Shell is working with NNPC to ensure that contractors are paid for truly assigned works” and using cash calls assigned for the joint- venture to pay them.

Nigeria is one of the world’s biggest oil producers, with pumping capacity of some 2.5 million barrels a day, or about 3% of the world’s daily oil needs.

Years of instability and violence in the country’s oil-rich southern Niger Delta, however, have raised repeated questions over the country’s long-term viability as a stable oil supplier.

-By Benoit Faucon, Dow Jones Newswires; +44-20-7842-9266; [email protected] dowjones.com 

  (END) Dow Jones Newswires
  03-03-08 1159ET
  Copyright (c) 2008 Dow Jones & Company, Inc.

http://money.cnn.com/news/newsfeeds/articles/djf500/200803031159DOWJONESDJONLINE000638_FORTUNE5.htm

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