- Nigeria to earn $10bn from the new oil financing deal
London, UK | – The Nigerian National Petroleum Corporation (NNPC) said on Tuesday that it had secured a US$3.15 billion financial and technical services agreement with local firm Sterling Oil Exploration & Energy Production Company Limited (SEEPCO) to develop the OML-13 oil license owned by NNPC’s upstream subsidiary NPDC.
The deal is part of NNPC’s strategy to develop more resources and increase oil production with the help of financing from third parties to spread out development costs.
At the beginning of this year, NNPC said that it was in talks with SEEPCO to raise US$3.15 billion, and in discussions with Nigerian company CMES-OMS Joint Venture Limited for another US$991.1 million, to boost its oil production. The state oil firm was seeking the total of US$4.1 billion to develop oil resources estimated at more than 400 million barrels of crude oil from three oil fields in Nigeria.
NNPC, which was pumping around 240,000 bpd out of Nigeria’s 1.78 million bpd production in January 2019, is looking to raise its production to more than 500,000 bpd.
Earlier this year, Nigeria’s oil operations were disrupted several times due to fires, shutdowns, force majeure, and protests. In April and May, a key oil pipeline and a logistics base in Nigeria’s oil-rich Niger Delta were rocked by a shutdown and protests in the latest incident that disrupted the Nigerian oil industry in the spring.
Shell declared a force majeure on Bonny Light exports, while exports of Amenam, operated by France’s Total, were also under force majeure in April.
Nigeria has managed to recover its production since May, and led the increases, with 129,000 bpd, among OPEC’s members who boosted production in June over May, even exceeding the boost in Saudi production. Nigeria’s crude oil production averaged 1.855 million bpd in June, according to OPEC’s secondary sources.
Meanwhile, Nigeria is to earn over $10.2 billion in royalties and taxes from the development of Oil Mining Lease (OML) 13 in the next 15 years courtesy of the $3.15 billion Financing and Technical Services Agreement signed between the Nigerian Petroleum Development Company (NPDC) and Sterling Oil Exploration and Energy Production Company Limited (SEEPCO).
The Nigerian National Petroleum Corporation (NNPC) has equally said the pact would enable the country increase oil reserves and daily production to three million barrels per day.
The deal would specifically lead to the development of the oil block, fully owned by the NPDC, located in the eastern axis of the Niger Delta and occupied a total area of 1987 square kilometre.
Group General Manager, Group Public Affairs Division of NNPC, Ndu Ughamadu, who quoted the Group Managing Director, Mele Kyari, said the fund would be “a game changer to oil and gas project financing in Nigeria.”
The GMD disclosed that the acreage boasts of over 926 million stock tank barrels (mmstb) and 5.24 trillion cubic feet (tcf) of oil and gas reserves, noting that the $3.15 billion ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.
First oil production of approximately 7,900bpd from the facility is billed for April 1, 2020, while exploration would peak at 94,000bpd and 542mmscfd within four years.
