NNPC secures N3.7bn financing, to boost output by 150,000bpd

Nigerian National Petroleum Corporation, said it has secured a total of $3.7 billion in Alternative Financing Agreement in the last three years. In a statement in Abuja, Group Managing Director of the NNPC, Mr. Maikanti Baru, stated that securing external funding arrangement was crucial to sustaining oil and gas production in Nigeria and ensuring the survival of Nigeria’s energy future.

Baru, said this at the 35th Annual Conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos, stating that “within the last three years, we have embarked on several successful Alternative Funding Programmes to sustain and increase the national daily production and producibility.” He explained that the $3.7bn financing package included the $1.2 billion multi-year drilling financing package for 23 onshore and 13 offshore wells under NNPC/Chevron Nigeria Limited Joint Venture termed Project Cheetah and the $2.5 billion alternative funding arrangements for NNPC/SPDC JV ($1 billion) termed Project Santolina; NNPC/CNL JV ($780 million) termed Project Falcon as well as the NNPC/First E&P JV and Schlumberger Agreement ($700 million).

Baru said that Project Cheetah is expected to increase crude oil production by 41,000 barrels of oil per day (bopd) and 127 million standard cubic feet per day (mmscfd0 with a Government-take of $6 billion over the life of the Project. In the same vein, Baru disclosed that Projects Santolina, Falcon and the NNPC/First E&P JV and Schlumberger Funding Arrangement are expected to increase combined production of crude oil and condensate by 150,000 bopd and 618 MMscfd of gas with a combined Government-take of about $32 billion over the life of the Projects.

He observed that evolving a new funding mechanism for the JV operations was a critical part of President Muhammadu Buhari’s far-reaching reforms aimed at eliminating cash call regime, enhancing efficiency and guaranteeing growth in the nation’s oil and gas industry. Baru also explained that NNPC and its JV partners began exploring alternative funding mechanisms that would allow the JV business finance itself in order to sustain and grow the business, due to the cash call underfunding challenge which rose to about $1.2bn in 2016 alone.

He added that with average JV cash call requirement of about $600 million a month, coupled with flat low budget levels over the past years, the budgeted volumes were hardly delivered.
“The truth is that it is difficult to deliver the volumes without adequate funding. The low volumes and by extension low revenues had resulted in the underfunding of the Industry by Government, which has stymied production growth,” he stated.
Also speaking, former Group Managing Director of the NNPC, Mr. Funsho Kupolokun, called for fresh approaches such as the involvement of more indigenous participation to address the challenges of funding upstream operations in the country.