The Nigerian National Petroleum Corporation on Sunday announced that it had secured a $1.2bn (N236bn) multi-year drilling financing package for 36 offshore/onshore oil wells under the NNPC/Chevron Nigeria Limited Joint Venture.
According to the corporation, the funding is packaged by a consortium of indigenous and international lenders, and is an integral part of the Accelerated Upstream Financing Programme initiated by the NNPC to address the perennial challenge being experienced by the Federal Government in providing its counterpart funding for JV upstream activities.
The NNPC, in a statement issued by its Group General Manager, Group Public Affairs Division, Mr. Ohi Alegbe, said the initiative, apart from supplementing the country’s cash-call commitments, would also help in the maintenance of current production levels in the short term as well as in replacing depleting foreign reserves.
The firm said, “Breakdown of the NNPC/ Chevron JV deal, which was executed at a signing ceremony in London over the weekend, indicates that the $1.2bn is to be channelled into the development of 23 onshore and 13 offshore wells in OML 49, 90 and 95 in two stages over 2015 to 2018.
“Stage one, comprising 19 wells, is projected to deliver 21,000 barrels of crude oil and condensate per day alongside 120 million standard cubic feet of gas per day over 2015 and 2016. Stage two, comprising 17 wells, is projected to yield 20,000 barrels of crude oil and condensate per day alongside gas production of 7mmscf/d between 2016 and 2018.”
The NNPC said it envisaged that both stages of the project would generate $2bn (N394bn) to $5bn (N985bn) of incremental revenue to the Federation Account.
It added that beyond the contribution to the national treasury, the projected peak incremental gas production of 127mmscf/d, which is an electricity equivalent of 400 megawatts, would help boost the Federal Government’s domestic gas aspirations with expectant positive effect on power supply.
The Group Managing Director, NNPC, Dr. Ibe Kachikwu, said the alternative funding arrangement was the new contractual model in upstream financing and would serve as a template for future initiatives to supplement the Federal Government’s JV cash call commitments.
While commending the NNPC/Chevron Joint Finance Team and the consortium of local and international lenders led by Standard Chartered Bank and UBA for a job well done, the GMD noted that the corporation would not relent in the renewed effort to restore probity and transparency to the process of generation, collection and remittance of crude oil proceeds.
“I have always believed that issues of Federation Account must be left sacrosanct and not to be toyed with. The Accelerated Upstream Financing Programme is designed to help us achieve this objective,” Kachikwu said.
The Managing Director, Chevron Nigeria Limited, Mr. Clay Neff, according to the statement, pledged the readiness of the oil major to work with the NNPC to meet its set target in the project.
The corporation said, “With the completion of its financing, Project Cheetah stands as the pioneer project under the AUFP of the NNPC. The project is operated under the NNPC/CNL JV, which is owned on a 60-40 basis in favour of the NNPC.
“The NNPC/CNL Joint Venture is reputed as the third largest producer in Nigeria. Project Cheetah is projected to achieve a peak incremental production of 61 million barrels of oil equivalent per day.”