Nigerian National Petroleum Corporation (NNPC’s) resolve to increase the nation’s crude oil reserves and daily oil production to three million barrels per day (mbpd), may have received a boost with the signing of a $3.15billion Financing and Technical Services Agreement (FTSA).
The deal was struck between Sterling Oil Exploration and Energy Production Company Limited (SEEPCO), and the exploration and production arm of NNPC, the Nigerian Petroleum Development Company (NPDC), for the development of Oil Mining Lease (OML) 13.
OML 13 is 100 per cent owned by the NPDC, and is located in the eastern axis of the Niger Delta covering a total area of 1987km².
According to the NNPC, the Federal Government is expected to earn over $10.2billion in royalties and taxes from the project over the next 15 years, while the Corporation would earn over $5billion after payment of the entire financing obligation.
A statement by the NNPC spokesperson, Ndu Ughamadu, quoted the Group Managing Director of NNPC, Mele Kyari, as describing the funding arrangement as “a game changer to oil and gas project financing in Nigeria.”
Kyari, who was represented by the Chief Operating Officer, Upstream, Roland Ewubare, expressed gratitude to President Muhammadu Buhari, for approving the transaction, adding that OML 13 held strong potential both for the petroleum industry and the nation’s economy.He advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder operations.
Kyari also disclosed that the acreage boasts of over 926 million stock tank barrels (mmstb), and 5.24 trillion cubic feet (tcf) respectively of oil and gas reserves, adding that the FTSA was for a period of 15 years while the $3.15bn ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.
First oil of about 7,900bpd is expected from the project by 1st April, 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years.
On local content, the project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities.
Also speaking at the occasion, Chairman of Sterling Oil Exploration and Energy Production Company Limited, Tony Chukwueke, expressed delight at the opportunity offered the company to support the production and reserves growth aspiration of the Federal Government.
In another development, NNPC and the Budget Office of the Federation, have commenced extensive stakeholder engagement designed to seek effective coordination of the 2020-2022 medium term fiscal frameworks.
The meeting, which held at the NNPC Towers on Tuesday, was attended by Kyari, and his top management team, while the Director-General, Budget Ben Akabueze led his team. Kyari said the parley marked the beginning of an extensive collaboration with the Budget Office to harmonise strategies geared towards ensuring optimisation of resources, aimed at improving the corporation’s revenue generation ability.
The move will also institute further transparency and enhance efficient reporting of oil and gas revenue remittances to the Federation Account.Earlier, Akabueze said the meeting was to acquaint the NNPC Management on all issues and possible fiscal scenarios ahead of the 2020-2023 budgetary frameworks.
He said the Budget Office was looking forward to fruitful future deliberations with the NNPC, to smoothen the process of achieving a win-win fiscal regime. Akabueze noted that despite the push to diversify the nation’s revenue base, the oil and gas sector remains the main earner of foreign exchange in Nigeria.