- Target 39,000bpd , 283mmscfd Crude, Gas Production
By Nse Annthony-Uko
ABUJA, (Sundiata Post) – Chevron Nigeria Limited (CNL) operators of the Chevron, Nigerian National Petroleum Corporation (NNPC) joint venture last weekend signed the second and final phase of an Alternative Financing Agreement worth $1.7million to complete a series of crude oil and gas production projects in the country.
The project when completed would increase the nation’s crude oil production by about 39,000 barrels per day as well as achieve an incremental peak production of about 283mmscfd of gas.
NNPC said the agreement was signed in London on behalf of the Corporation by the Group Managing Director of the NNPC, Dr. Maikanti Baru who explained that the agreement would spread “over the remaining life of the asset (until 2045).”
The Managing Director of CNL, Mr. Jeff Ewing discribed the project as an expression of 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 expressed Chevron’s commitment to execute the programme safely, timely and deliver its expected values for all stakeholders.
Explaining further, NNPC in a statement said Dr. Baru said the project, which is about 92% completed, will cost about $1.7bn, with $780mn 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.
Dr. 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.
According to him, 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.
In carrying out the project, the NNPC/CNL JV adopted a 2-staged financing approach. While Stage 1 which provided $400mn sourced from Nigerian Commercial Banks (NCBs) achieved financial close on 1st August 2017, Stage 2, (signed today), is set to provide $380mn from International Commercial Banks (ICBs).
Out of the US$780mn total financing for both stages, Chevron’s Co-lending totals US$312mn while NNPC’s portion of the total facility stands at is US$468mn.
Speaking further on the Alternative Financing approach, Dr. 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.
It would be recalled that in August this year, 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 parts of the federal government’s aspirations for the Oil and Gas Industry.