The Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have signed the second and final phase of an Alternative Financing Agreement that will increase crude oil production by about 39,000 barrels per day from the Sonam and Okan fields located in the OML 90 and 91 of the Niger Delta.
The agreement, which was signed in London at the weekend, is also expected to achieve an incremental peak production of about 283 million standard cubic feet per day (MMSCFD) of gas.
The NNPC Group Managing Director Dr. Maikanti Baru, who signed on behalf of his corporation, said the increment to be achieved by the agreement would spread “over the remaining life of the asset (until 2045)”.
In a statement issued by the corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, on Sunday, Baru said the project, which is about 92 per cent completed, will cost about $1.7 billion, with $780 million expected to be funded by a third-party.
He added that the project would produce natural gas liquids and condensate from the Sonam and Okan fields located in the OML 90 and 91 of 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.
The statement read: “As we speak now, the facilities are 100 per cent completed while wells are 40 per cent executed.”
“In carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach. Stage 1 which provided $400 million 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 US$468mn.”
He further 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.
The Managing Director, 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 stated.
He commended partners of the project 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.