Shell, Nigeria Find Consensus On Funding Shortfalls

On Wednesday the oil major Royal Dutch Shell PLC announced that it has found a solution with Nigeria's state-owned oil company on how to resolve the chronic funding shortfalls at its joint venture that was delaying oil projects and hampering production.

Basil Omiyi, country chair of Shell in Nigeria, said in an interview "We have agreed on how to deal with the funding arrears and how to fund the processes in the future."

Shell is the largest foreign oil company in Nigeria and owns 30% of joint venture Shell Petroleum Development Co., or SPDC. The government-owned Nigerian National Petroleum Corp., or NNPC, which owns 55%, had earlier delayed payments of its share of funding in joint ventures with Shell and other foreign companies, slowing new oil developments in the country.

The oil minister said that for the first time the government will try to fund the joint ventures "leveraging on assets in the same way as our partners have always done. So we're going to the capital markets to raise funds, both local and international."

The government is "in the process" of mandating local banks to help fund the joint ventures in the long term, Ajumogobia said.