...Targets 38bn in
Revenue, 190,000bopd Increased Production
The Nigerian National Petroleum Corporation has secured a
total of $3.7bn in Alternative Financing Agreement in the last three years,
Group Managing Director of the Corporation, Dr. Maikanti Baru has said.
Dr. Baru, who made this known while speaking at the 35th Annual
Conference of the Nigerian Association of Petroleum Explorationists (NAPE) in
Lagos on Wednesday, said securing external funding arrangement was crucial to
sustaining oil and gas production in Nigeria and ensuring the survival of
Nigeria’s energy future.
“Within the last three (3) years, we have embarked on
several successful Alternative Funding Programmes to sustain and increase the
national daily production and producibility,” Dr. Baru told delegates at the
annual conference.
According to the GMD, the $3.7bn financing package included
the $1.2Billion multi-year drilling financing package for 23 onshore and 13
offshore wells under NNPC/Chevron Nigeria Limited Joint Venture termed Project
Cheetah and the $2.5Billion alternative funding arrangements for NNPC/SPDC JV
($1Billion) termed Project Santolina; NNPC/CNL JV ($780Million) termed Project
Falcon as well as the NNPC/First E&P JV and Schlumberger Agreement
($700Million).
Project Cheetah is expected to increase crude oil production
by 41,000bopd and 127Mmscfd with a Government-take of $6Billion over the life
of the Project.
In the same vein, 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 150,000bopd and
618MMscfd of gas with a combined Government-take of about $32Billion over the
life of the Projects, Dr. Baru added.
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.
Explaining further, Dr. Baru noted that as a result of the
cash call underfunding challenge which rose to about $1.2bn in 2016 alone, 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.
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 observed.
Today, with the new Alternative Funding Arrangement in
place, JVs will now relieve Government of the cash call burden by sourcing for
funds for their operations (estimated at $7-$9 billion annually).
Dr. Baru, who spoke on the theme: “Review of the Current
State of Funding for the Upstream Sector and the need for a New Policy
Initiative”, commended NAPE for its contributions towards shaping the Oil and
Gas landscape in Nigeria, said it was incumbent on NNPC to associate with such
a professional body for the benefit of the nation.
“It is on record that key pieces of legislation such as the
Marginal Fields Act and the Deepwater Fiscal Policies, the Nigerian Content
Act, as well as the Unitization Policy were all based on templates that came
out of previous NAPE Conferences,” he said.
Corroborating Dr. Baru’s case for Alternative Funding,
former GMD of NNPC, Engr. 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.
Earlier in his speech, President of NAPE, Mr. Abiodun
Adesanya, described the challenge of cash call as very critical because it
affects all the objectives and targets of growing the reserves and increasing
crude oil production in the country.
This year’s NAPE Conference has as its theme: “Beyond Cash
Call: New Funding Strategies for the Nigerian Upstream Oil & Gas Industry.
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