The Nigerian National Petroleum
Corporation, NNPC and its joint venture partner, Chevron Nigeria Limited, CNL,
at the weekend executed the second and final phase of an alternative financing
agreement, which the Group Managing Director, Maikanti Baru, said would help
increase the country’s crude oil production by about 39,000 barrels per day.
Mr. Baru, who spoke in London at
the formal signing of the agreement, said the arrangement would also help
achieve ”an incremental peak production of about 283 million standard cubic
feet per day, MMSCFD of gas.”
According to the GMD, the increased
production capacity would spread “over the remaining life of the asset (until
2045).”
Out of the total cost about $1.7
billion, Mr. Baru said, the project, which is about 92 per cent completed,
include a $780 million third-party funding.
When completed, the facility would
produce natural gas liquids and condensate extracted from the Sonam and Okan
fields located in oil mining leases OMLs 90 and 91 in the Niger Delta.
Mr. Baru described the deal as a
step in the right direction, saying it would grow the nation’s daily production
capacity and support the strategic domestic gas-to-power aspirations, while
aligning with NNPC’s 12 Business Focus Areas (BUFAs).
He said the project would also
include the completion of the Sonam non-associated gas, NAG, platform and Sonam
living quarters platform; drilling of seven wells in the Sonam field and the
Okan 30E NAG well, as well as the completion of the 20 inches by 32 kilometre
Sonam pipeline and Okan pig receiver platform and development of the associated
facilities.
The GMD said, ”the facilities at
the moment were 100 per cent completed”, while the wells were 40 per cent
executed.
In carrying out the project, the
NNPC boss said the joint venture adopted a two-staged financing approach,
involving the provision of $400 million in the first stage, sourced from
Nigerian commercial banks, and financial closure achieved on August 1, 2017.
The second stage financing to
provide another $380 million from International Commercial Banks, ICBs, was
what was sealed at the weekend in London.
Out of the $780 million total
financing deal for both stages, Chevron JV would be co-lending about $312
million, while the NNPC’s portion would be about $ 468million.
On the Alternative Financing
approach, Mr. Baru explained that it was aimed at bridging NNPC’s shortfall in
funding JV cash call obligations, including settlement of pre-2016 cash call
arrears.
The arrangement would also enable
full funding of NNPC’s JV obligations to restore investors’ confidence and
stimulate further Foreign Direct Investments, FDIs in the industry.
Earlier in his remarks, the
Managing Director of CNL, Jeff Ewing, said his company supported the Federal
Government’s aspirations to sustain oil and gas production.
“We know the important role gas
supply to the domestic market plays in growing power generation. We also
understand government’s need to seek alternative sources to fund profitable and
bankable JV Projects”, Mr. Ewing added.
He commended the NNPC and other
partners for backing the third party financing arrangement, which he said,
would lessen cash call burden on the federation account.
Mr. Ewing expressed Chevron’s
commitment to execute the programme safely and timely, to deliver the expected
values for all stakeholders.
In August this year, two sets of
alternative financing agreements on JV projects were executed between the
NNPC/CNL JV (project Falcon) and the NNPC/SPDC JV (Project Santolina).
Both are aimed at boosting reserves
and production in line with parts of the federal government’s aspirations for
the Oil and Gas Industry.
Source: Premium Times
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