The Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have executed the second and final phase of an Alternative Financing Agreement that will increase crude oil production in the country by about 39,000 barrels per day.
The agreement which was signed in London at the weekend is also expected to achieve an incremental peak production of about 283 million standard cubic feet per day (mmscfd) of gas.
Group Managing Director of NNPC, Dr. Maikanti Baru, who signed on behalf of NNPC, said the increment to be achieved by the agreement would spread “over the remaining life of the asset (until 2045).”
According to him, the project, which is about 92 per cent completed, would cost about $1.7bn, with $780m expected to be funded by a third party, while it would produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in Oil Mining Lease (OML) 90 and 91 in the Niger Delta.
According to a statement through NNPC spokesman, Ndu Ughamadu, Baru described the deal as a step in the right direction which would grow the nation’s daily production and support the Federal Government’s strategic domestic gas-to-power aspiration, 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) well 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 20x 32Km Sonam pipeline and Okan pig receiver platform and development of the associated facilities.
In carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach. While Stage 1 which provided $400m sourced from Nigerian Commercial Banks (NCBs) achieved financial close on August 1, 2017, Stage 2, (signed at the weekend), is set to provide $380m from International Commercial Banks (ICBs).
Out of the US$780m total financing for both stages, Chevron’s Co-lending totals US$312m while NNPC’s portion of the total facility stands at US$468m.
Speaking further on the Alternative Financing approach, Dr. Baru explained that it was aimed at plugging NNPC’s shortfall in funding JV cash call obligations, including settlement of pre-2016 cash call arrears.
“It will also enable full funding of NNPC’s JV obligations to restore investors’ confidence and stimulate further Foreign Direct Investments (FDIs) as we are beginning to witness,” he noted.
Earlier in his remarks, the Managing Director of CNL, Mr. Jeff Ewing, said his company supported the Federal Government’s aspiration to sustain oil and gas production.
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