The Nigerian National Petroleum Corporation (NNPC) joint partners have in London struck two alternative financing agreements on Joint Venture (JV) projects to boost reserves and production.
The partners are NNPC/Chevron Nigeria Limited, and NNPC/Shell Petroleum Development Company (SPDC) JV. The two projects are expected to generate incremental revenues of about $16 billion within the assets’ life cycle including a flurry of exploratory activities that would generate employment opportunities in the industry, boost gas supply to power and rejuvenate Nigeria’s industrial capacity utilization.
The agreement with Chevron would see the development of the NNPC/CNL JV Sonam Project (Project Falcon), hitherto financed through cash calls, to incremental proven and probable oil/liquids reserves of 211 million barrels and proven and probable gas reserves of 1.9 trillion cubic feet within in Oil Mining Licences (OMLs) 90 and 91.
The agreement with SPDC, on the other hand, would facilitate the development of the NNPC/SPDC JV Project Santolina which comprised of 156 development activities across 12 OMLs and 30 different fields in the Niger Delta.
Speaking at the signing ceremony in London, Group Managing Director of the NNPC, Dr. Maikanti Baru, said the project is envisaged to achieve an incremental peak production of about 39, 000 barrels per day of liquids and 283 million standard cubic feet of gas per day (mmscf/d) of gas respectively over the life cycle of the asset.
The Joint Venture partner, he said, had already expended $1.5 billion representing 97 per cent of project completion costs, adding that the agreement would cover the remaining $780 million to complete the project’s scope.
Providing a breakdown of the expected funding requirements of the Sonam Project, Baru said $400 million is to fund the development of seven wells in the Sonam field (OML 91), the Okan 30E Non-Associated Gas (NAG) well (OML 90), and associated facilities including completion of Sonam NAG Well Platform.
The GMD added that $380 million would also be required to reimburse the JV partners for the 2016 portion of the funds committed to lenders that had been cashed and paid for.
He stated that the Sonam Project alone, on fruition, would net the Federal Government cumulative incremental earnings of $7.3 billion over the project’s life.