By Mike Abba
The Nigerian National Petroleum Corporation (NNPC) has executed an agreement with Chevron Nigeria Limited (CNL) aimed at increasing crude oil and natural gas production.
Crude oil production is meant to achieve almost 40,000 barrels per day increase and boost revenue of both organisations.
The deal was second and final phase of an Alternative Financing Agreement towards achieving the targeted production limit.
Group Managing Director of the NNPC, Dr. Maikanti Baru, who signed on behalf of his Corporation said the deal is also expected to achieve an incremental peak production of about 283mmscfd of gas.
Baru disclosed in London, where the agreement was signed at the weekend, that the increment to be achieved by the deal would spread “over the remaining life of the asset (until 2045).”
He noted that the project will cost about $1.7bn with $780mn expected to be funded by third-party, while it will produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in OML 90 and 91 in the Niger Delta. The project, he said, is about 92 per cent completed.
Baru explained that the deal was 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 aspirations, while aligning with NNPC’s 12 Business Focus Areas (BUFAs).
“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 20“ x 32km Sonam pipeline and Okan pig receiver platform and development of the associated facilities.
“As we speak now, the facilities are 100% completed while wells are 40% executed. In carrying out the project, the NNPC/CNL JV adopted a 2-staged financing approach. While Stage 1 which provided $400mn sourced from Nigerian Commercial Banks (NCBs) achieved financial close on 1st August 2017, Stage 2, (signed today), is set to provide $380mn from International Commercial Banks (ICBs),” Baru said.
It was disclosed that out of the US$780mn total financing for both stages, Chevron’s Co-lending totals US$312mn while NNPC’s portion of the total facility stands at is US$468mn.
Baru explained further that the deal 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.
In his own remarks, the Managing Director of CNL, Mr. 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.”
Commending Dr. Baru and other partners for backing the third-party financing arrangement, he said the deal would lessen cash call burden on the federation account.
Ewing expressed Chevron’s commitment to execute the programme safely, timely and deliver the expected values for all stakeholders.
