NNPC okays $2bn to defray outstanding cash call arrears

NNPC okays $2bn to defray outstanding cash call arrears

In order to encourage existing players in Nigeria’s oil and gas industry, especially its Joint Ventures (JV) partners, the Nigerian National Petroleum Corporation (NNPC) on Tuesday, said it has paid  over $2billion to defray outstanding cash call arrears.  Dr. Maikanti Kacalla Baru, the outgoing Group Managing Director of NNPC, disclosed in Abuja during his a keynote address while declaring open the


In order to encourage existing players in Nigeria’s oil and gas industry, especially its Joint Ventures (JV) partners, the Nigerian National Petroleum Corporation (NNPC) on Tuesday, said it has paid  over $2billion to defray outstanding cash call arrears.

 Dr. Maikanti Kacalla Baru, the outgoing Group Managing Director of NNPC, disclosed in Abuja during his a keynote address while declaring open the 2019 edition of the Nigeria Oil and Gas Strategic Conference and International Exhibition at the International Conference Centre in Abuja.

Baru said NNPC undertook to settle all outstanding cash call arrears amounting to $5billion in 2015, adding that move was part of efforts towards sustaining investment and renewing investor confidence.

To encourage the existing players in the Industry particularly the traditional JV partners, NNPC undertook to settle all outstanding cash call arrears amounting to $5billion in 2015. To date, we have defrayed over $2billion. All these efforts are geared towards sustaining investment and renewing investor confidence” he said.

The NNPC boss said stated that out of about $194billion capital investment flow into Africa for the period 2018 to 2025, $48.04bn came to the Nigerian oil and gas sector for various development projects.

He stated that the oil and gas industry was an essential building block in the nation’s economic growth.

Speaking on the theme of this year’s NOG Conference “Promoting Investment and Collaboration in Nigeria’s Oil and Gas Industry”, the NNPC helmsman stated that from the Upstream to the Midstream and Downstream sub-sectors, the Nigerian oil and gas industry was replete with massive investment opportunities.

“Nigeria holds about 2.2 per cent of global oil reserves. Our crude oil reserves have grown steadily from about 22 billion barrels in 1999 to 37.5billion barrels in 2018. Nigeria is home to the second largest crude oil reserves in Africa after Libya. Our crude oil production currently hovers around 2.2 -2.3 million barrels of oil per day (bpd). This was bolstered by the coming on stream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd,” Baru stated.

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On the gas side, he said Nigeria has the 9th largest gas reserves in the world with an estimated proven and probable gas reserves of 201Trillion cubic feet (Tcf) and upside potential of about 600Tcf.

“In terms of gas production and utilization, Nigeria averages about 8.4bscfd. While only 18% of the production is consumed in the domestic market (Power, Industries and WAGP), 43% is exported as LNG, 32% is re-injected for enhanced oil recovery and other operational uses like fuel gas while 7% of total gas production is currently being flared”, he said.

The GMD stressed that the reserve figures by themselves did not mean anything unless investment in their development and production was driven in a sustainable and collaborative manner.

Dr. Baru noted that in the last three years, the NNPC had been very active in the capital market assessing financing for different projects in order to sustain industry momentum, adding that the strategy was also used as a lever to promote collaboration.

“Over the past years, through a systematic process, we have incrementally opened new areas to indigenous players. For some, it has provided the opportunity to collaborate with international or established industry players,” Baru informed.

He stated between 2015 and 2017, the state oil corporation was involved in various project financing of over $3billion in new investment.

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He listed some of the projects to include:  the $1.2billion multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49, 90 and 95 under the NNPC/Chevron JV christened Project Cheetah; NNPC/SPDC JV ($1Billion) code-named Project Santolina; NNPC/CNL JV ($780Million) codenamed Project Falcon; and NNPC/First E&P JV and Schlumberger ($700Million).

PRESIDENT MUHAMMADU BUHARI

Baru stated that this year, the Corporation had significantly progressed new third party financings for the NNPC/SPDC JV and NNPC/MPNU JV with both transactions substantially over-subscribed.

“NNPC/SPDC Santolina III Project has an estimated cost of about $500million and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3billion (NNPC to raise circa $700 Million in third-party financing). Furthermore, we have initiated third-party financing for the NNPC/NAOC Okpai II Independent Power Plant (IPP) project with an estimated cost of circa $658.42million and the NNPC/TEPNG Ikike development project with the estimated cost of circa $473.4million to be funded through prepayment for gas by NLNG,” Baru enthused.

He revealed that the NNPC has successfully initiated the Memorandum of Understanding (Framework Agreement) between NNPC and NLNG for the provision of circa $2.5 Billion funding for NNPC’s portion of Cash Call payable on Upstream Gas Supply Projects for Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG) and Nigeria Agip Oil Company (NAOC) Joint Ventures.

“We have, also, initiated negotiations for the Financing and Technical Services Agreements (FTSAs) for identified NPDC Assets – OMLs 13, 65 and 111. As you may be aware, NPDC currently contributes about 8% of current national daily production. Further developments from these assets and NPDC JV assets is expected to move NPDC to over 300bopd equity,” the NNPC helmsman quipped.

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He maintained that the NNPC has progressed negotiations with Engineering, Procurement and Construction Contractors and potential Chinese lenders on the third-party financing for the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project of $2.89 Billion.

On the Frontier Basins, Baru submitted that exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River -2 well in the Benue Trough with the findings in the Kolmani River -1 by SNEPCO being confirmed and a lot more interesting information being revealed by the well as it approaches the total depth of 14,250ft.

He emphasized that promoting investment requires stability in regulatory framework, clarity in terms of fiscal direction and reforms, access to capital and more importantly effective and efficient deployment of both capital and human resources.

Baru assured that Nigeria offers and would continue to offer portfolio of promising, high-value projects with healthy returns.

He observed that at the NNPC, the Corporation has since recognized the challenge as well as the opportunities oil demand growth has presented particularly as a crude oil exporter experiencing a surge in local demand for petroleum products requiring a paradigm shift in business model in order to attract capital and sustain flow of investment.

Earlier in her welcome address, the Vice President of CWC Africa, organizers of the Conference, Wemimo Oyelana, said the conference aims to stimulate discussion around strategies that promote collaboration and draw investment into the Country’s hydrocarbon industry.

/Independent

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