Dr. Maikanti Baru, Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), has called for more alternative financing models to fund the Corporations Joint Venture (JV) obligations.
Speaking on Monday at the 42nd Society of Petroleum Engineers (SPE) Nigeria Annual International Conference & Exhibition (NAICE) in Lagos, Baru said the JV obligations has continued to restore confidence among investors and stimulate Foreign Direct Investments (FDI) in the nation’s oil and gas industry.
The NNPC boss who spoke on “Revamping the Nigeria Oil & Gas Industry through Alternative Funding: Opportunities, Challenges, Innovations & Solutions, said alternative financing has deepened local banks’ participation in the upstream sub-sector of the industry.
According to him, with sustainable funding, deep-water production sharing, which currently accounts for 41percent of daily national production, has risen significantly with over 2000 percent production growth recorded within the last 10 years.
The NNPC helmsman said in order to meet government expenditure and strategic focus, the Corporation had to explore alternative financing, which he said was important to the sustenance of the industry.
With increasing global competition, which he listed to include new production centres across the globe, especially in Africa, shale oil in the US, Argentina and other places; and competition in terms of crude oil quality, Baru said “To turn the wheel of the industry and ensure that funding doesn’t limit our growth, it is important we consider both the traditional and non-traditional funding options.”
Traditionally, he said, Nigeria had raised funds utilising equity or self-funding from cash-flow, commercial debt instrument or partner funding in form of Carry or Modified Carry Arrangement (MCAs), while the non-traditional funding options include contractor-financing/deferred payment, pension funds, private equity, Sovereign Wealth Funds and Export Credit Agencies (ECAs).