19 November 2017, Sweetcrude, Abuja — Nigerian National Petroleum Corporation (NNPC) and its Joint Venture ( JV) partner, Chevron Nigeria Limited (CNL) Sunday, executed the second and final phase of an Alternative Financing Agreement that would see them raising $380 million from a consortium of international commercial banks to finance the developments of a number of projects in the Sonam and Okan wells in Oil Mining Leases 90 and 91.
The NNPC in a statement by its Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, said the agreement signed in London would increase Nigeria’s crude oil production by 39,000 barrels per day and also boost gas output by 283 million standard cubic feet per day.
The NNPC stated that in carrying out the project, together with Chevron, it adopted a 2-staged financing approach, declaring that while Stage 1 which provided $400mn sourced from Nigerian Commercial Banks (NCBs) achieved financial close on 1st August 2017, Stage 2, (signed Sunday), is set to provide $380 million from International Commercial Banks (ICBs).
Out of the US$780 million total financing for both stages, the statement said Chevron’s Co-lending totals $312 million while NNPC’s portion of the total facility stands at $468 million.
Group Managing Director of the NNPC, Mr. Maikanti Baru, who signed on behalf of the corporation, said the increment to be achieved by the agreement would spread over the remaining life of the asset, until 2045.
According to him, the project, which is about 92%ompleted, will cost about $1.7 billion, with $780 million expected to be funded by third-party, while it 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% completed while wells are 40% executed,” Baru stated.
Furthermore, Baru explained that the Alternative Financing approach, was aimed at plugging NNPC’s shortfall in funding JV cash call obligations including settlement of pre-2016 cash call arrears.
He also noted that it would 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.
Speaking in the same vein, the Managing Director of CNL, Mr. 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.
He commended Dr. Baru and other partners for backing the third party financing arrangement, which he said, would lessen cash call burden on the federation account.
He expressed Chevron’s commitment to execute the programme safely, timely and deliver its expected values for all stakeholders.