The Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have injected about $1.7 billion into the oil and gas sector in the country to increase production capacity by 39,000 barrel per day.
Disclosing yesterday that it has executed the second and final phase of an Alternative Financing Agreement, NNPC said the new deal was expected to achieve an incremental peak production of about 283mmscfd of gas.
Group Managing Director of the NNPC, Maikanti Baru, who signed the pact in London, said the increment to be achieved by the agreement would spread "over the remaining life of the asset (until 2045)."
The project, which is about 92 per cent completed, will cost about $1.7 billion, with $780 million expected to be funded by third-party, while it would reduce natural gas liquids and condensate extracted from the Sonam and Okan fields located in OML 90 and 91 in the Niger Delta, Baru said in statement.
He said that the deal was a step in the right direction to 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). As we speak now, the facilities are 100 per cent completed while wells are 40 per cent executed," Baru stated.
He noted that 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.
In carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach. While Stage 1 which provided $400 million sourced from Nigerian Commercial Banks (NCBs) achieved financial close on August 1, 2017, Stage 2, (signed today), is set to provide $380mn from International Commercial Banks (ICBs), the group said.
Baru added that out of the $780 million total financing for both stages, Chevron's co-lending totals US$312 million while NNPC's portion of the total facility stands at is $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.
Earlier in his remarks, the Managing Director of CNL, 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," Ewing added.