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NNPC eyes $16b from Shell, Chevron deals



Two sets of alternative financing agreements on Joint Venture (JV) projects to boost reserves and production in line with government’s aspiration were executed in London between the Nigerian National Petroleum Corporation (NNPC) and two of its JV partners: NNPC/Chevron Nigeria Limited (CNL) JV and NNPC/Shell Petroleum Development Company (SPDC) JV.

The two projects are expected to generate incremental revenues of about $16billion within the assets’ life cycle including a flurry of exploratory activities that would generate employment opportunities in the industry, boost gas supply to power and rejuvenate Nigeria’s industrial capacity utilisation.

The agreement with Chevron would see the development of the NNPC/CNL JV Sonam Project (Project Falcon), hitherto financed through cash calls, to incremental proven and probable oil/liquids reserves of 211million barrels and proven and probable gas reserves of 1.9 trillion cubic feet within in Oil Mining Licences (OMLs) 90 and 91.

The project is expected to begin to bear fruits in next three and six months.

The  Group Managing Director, NNPC, Dr. Maikanti Baru, said the project is envisaged to achieve an incremental peak production of about 39, 000 barrels per day of liquids and 283million standard cubic feet of gas per day (mmscf/d) of gas respectively over the life cycle of the asset.

The JV partner, he said, had already spent $1.5billion representing 97 per cent of project completion costs, adding that the agreement would cover the remaining $780million to complete the project.

Giving a breakdown of the expected funding requirements of the Sonam Project, Dr. Baru said $400million is to fund the development of seven wells in the Sonam field (OML 91), the Okan 30E Non-Associated Gas (NAG) well (OML 90), and associated facilities including completion of Sonam NAG Well Platform.

He added that $380million would also be required to reimburse the JV partners for the 2016 portion of the funds committed to lenders that had been cashed and paid for.

He said the Sonam Project alone, would increase government’s earnings to $7.3billion over its life.

The agreement with SPDC, on the other hand, would facilitate the development of the NNPC/SPDC JV Project Santolina which comprise 156 development activities across 12 OMLs (OMLs 11, 17, 23, 25, 27, 28, 32, 35, 43, 45, 46 and 79) and 30 different fields in the Niger Delta.

The GMD said the development of the Sonam Project would be done in two phases, with the first phase focusing on short term activities involving Oil and Gas Generation (STOGG) programme comprising 128 rigless activities and 10 workovers. The second phase would focus on medium term activities that would involve further development of EA/EJA fields by drilling 14 new well and three workover ones.
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