02 July 2018, Sweetcrude, Abuja — The Nigerian National Petroleum Corporation, NNPC has finalized the $724.14 million financing and technical services arrangement for the Anyalu and Madu fields under Oil Mining Licence, OML 83 and OML 85, offshore Nigeria.
The financing and technical services arrangement is between the Corporation, its joint venture partner, First E&P Limited, and Schlumberger
The NNPC in a statement in Abuja said this was one year after signing the tripartite term sheet for the contract.
Group Managing Director of the NNPC, Mr. Maikanti Baru, stated that under the agreement, global oil services giant, Schlumberger would provide $724.14 million out of the required project cost of $1.082 billion while the balance of $358.79 million was to be funded with cash flows generated by the project.
He said the Anyala and Madu fields are projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with production plateau of 50, 000 barrels of oil per day and 120 million standard cubic feet of gas per day.
Baru noted that in arriving at the innovative alternative funding package, the corporation was guided by the need to instill transparent and accountable processes.
He added that the NNPC also followed strict compliance with all extant laws, regulations and established governance protocols as well as overriding national interest and drive to achieve competitive market pricing for such a greenfield project.
Baru explained that the NNPC/FIRST E&P JV project financing formula came as a creative approach to funding JV operations in response to the realities of the prevailing operating environment.
“Apart from aligning wholly with government’s aspiration of increased crude oil and gas production, reserves growth and monetization of the nation’s enormous gas resources, the model is in tandem with one of the corporation’s 12 Business Focus Areas (BUFAs); ramping up crude oil & gas reserves & production which also supports Government’s 7 Big Wins aspirations,” he noted.
Baru noted that the Schlumberger financing package covers pre-Final Investment Decision (FID) funding, 100 percent of capital expenditure for three years and pre-production operating expenses.
He added that the package would enable the country to generate $5.60 billion in taxes and royalties and $1.32 billion in net cash flows after Schlumberger’s cost recovery & compensation in line with the terms of the agreement.
According to him, apart from providing funding for the development of the fields, Schlumberger would also provide other oilfield services to the JV on a limited exclusive basis. A joint project team would drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.