Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have signed the second and final phase of an Alternative Financing Agreement that will increase crude oil production 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.
NNPC Group Managing Director Dr. Maikanti Baru, who signed on behalf of his corporation, said the increment to be achieved by the agreement would spread “over the remaining life of the asset (until 2045)”.
The corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, in a statement yesterday, said the project, which is about 92 per cent completed, will cost about $1.7 billion, with $780 million expected to be funded by a third-party.
The project will produce natural gas liquids and condensate extracted from the Sonam and Okan fields located in OML 90 and 91 in the Niger Delta.
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 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”) 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 per cent completed while wells are 40 per cent executed,” Baru stated.
“In carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach. Stage 1 which provided $400 million 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).
“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 US$468mn,” the statement said.
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.
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