Nigerian National Petroleum Corporation (NNPC) has sealed a $1.2 billion multi-year drilling financing package for 36 Offshore/Onshore Oil wells under the NNPC/Chevron Nigeria Limited Joint Venture.
The funding package, being financed by a consortium of Nigerian and International lenders is an integral part of the Accelerated Upstream Financing Programme (AUFP) initiated by the new NNPC management to address the perennial challenge experienced by the Federal Government in providing its counter-part funding of JV upstream activities.
The new deal signed by the Group Managing Director of the NNPC, Dr. Ibe Kachikwu and the Managing Director of Chevron Nigeria Limited, Mr. Clay Neff at a special signing-ceremony in London over the weekend would also help in the maintenance of Nigeria’s oil production levels in the short term as well as replacing depleting reserves.
NNPC GMD, Dr. Ibe Kachikwu, described the alternative funding arrangement deal as the new contractual model in upstream financing which would serve as a template for future initiative to supplement the Federal Government’s Joint Venture Cash Call commitment. The NNPC boss stressed that the Corporation will 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 Accounts must be left sacrosanct and not to be toyed with. The Accelerated Upstream Financing Programme is designed to help us achieve this objective,’’ he said.
Breakdown of the NNPC/Chevron JV deal indicate that the $1.2bn is to be channeled into the development of 23 onshore and 13 offshore wells on OML 49, 90 and 95 in two stages over 2015- 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, mmscf/d, 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.
It also envisaged that both stages of the project would generate $2 to $5 billion of incremental revenue to the Federation account.
Beyond the contribution to the national treasury, the projected peak incremental gas production of 127 mmscf/d, which is the electricity equivalent of 400 megawatts would help boost the Federal Government’s domestic gas aspirations with expectant positive effect on power supply.
With the completion of its financing, Project Cheetah stands as the pioneer project under the Accelerated Upstream Financing Programme 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 3rd largest producer in Nigeria. Project Cheetah is projected to achieve a peak incremental production of 61 million barrels of oil equivalent per day.
By Olisemeka Obeche (with agency reports)