The Nigerian National Petroleum Corporation and Chevron Nigeria Limited have executed the final phase of an Alternative Financing Agreement to increase crude production by about 39,000 barrels per day.
The agreement, signed in London, is also expected to achieve an incremental peak production of about 283mmscfd of gas, NNPC Group Managing Director, Dr. Maikanti Baru, said in a statement on Sunday.
The statement was issued by Ndu Ughamadu, Group General Manager, Public Affairs Division of the NNPC.
Baru said the increment, to be achieved by the agreement, would spread “over the remaining life of the asset (2045)”.
According to him, the project, which is about 92 per cent completed, will cost $1.7 billion and is expected to be funded by third-party.
He said it would 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.
He said the project would include the completion of the Sonam non-associated gas well platform and Sonam living quarters platform, drilling of seven wells in the Sonam field and the Okan 30E NAG well.
It will also include the completion of the 20x32km Sonam pipeline and Okan pig receiver platform and development of the associated facilities, Baru added.
“As we speak now, the facilities are 100 per cent completed while wells are 40 per cent executed,” he said.
In carrying out the project, the NNPC/CNL Joint Venture adopted a two-stage financing approach: Stage 1, which provided $400 million sourced from Nigerian Commercial Banks, achieved financial closure on August 1, 2017.
Stage 2, signed on November 17, is set to provide $380 million from International Commercial Banks.
Out of the $780 million total financing for both stages, Chevron’s co-lending totals $312 million, while NNPC’s portion of the total facility stands at $468 million.
Speaking further on the Alternative Financing approach, 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.
The Managing Director of CNL, Jeff Ewing, said his company supported the Federal Government’s aspirations to sustain oil and gas production.
Ewing said: “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.”
In August, two sets of alternative financing agreements on JV projects were executed between the NNPC/CNL JV (project Falcon) and the NNPC/SPDC JV (Project Santolina).
Both are aimed at boosting reserves and production in line with the Federal Government’s aspirations for the Oil and Gas Industry.