The Nigerian National Petroleum Corporation says it has signed a $875.75 million funding and technical services agreement and alternative financing deal for the Nigerian Petroleum Development Company-operated Oil Mining Lease 65.
The Corporation in a statement by its spokesman, Ndu Ughamadu, in Abuja on Sunday said it signed the deal with CMES-OMS Petroleum Development Company.
The Chief Financial Officer of the NNPC, Umar Ajiya, who signed for corporation, explained that the package entailed comprehensive financing solution that addresses the complex issues involved in growing NPDC’s production.
He added it would help minimise its cost of capital and maximise its value preservation.
On CPDC’s right to provide technical services, Ajiya listed the field of consideration in this regard to include: drilling and completion services, building capacity and technology transfer, and generating employment opportunities for youths.
This, he added, would have an attendant positive multiplier effect on the nation’s economy, among other considerations.
Ajiya noted that the deal would also strike a balance between risk and reward, which gave investors a rate of return that was commensurate with funding a brownfield project that had significant exploration risk.
Ajiya noted that the expectation was that the collaboration between the NPDC and CPDC would translate in real terms to the efficient execution of the scope of activities for the optimal development of the OML 65 asset within cost and schedule, whilst maximising value to all the stakeholders.
He said it was projected that the collaboration would enhance operational and financial performance strictly guided by the pre-agreed Key Performance Indicators, which remains critical for determining incentive payment due to CPDC.
Ajiya further disclosed that the project, which scope cuts across exploration, development, production and provision of facilities with incremental first oil targeted for fourth quarter 2020, was estimated to have potential reserves of 800 million barrels of oil equivalent.
“It will also help an ultimate recoverable reserve of 244 mmboe and cumulative production of 44mmboe from the Abura Main and Abura SE fields,” he said.
He explained that over the project’s life, it was expected to generate over $6.35 billion in taxes and royalties to the Federation to support government’s medium to long term economic development agenda.
He described the contractor financing model as an innovative approach by NPDC to funding its operations in response to the challenging economic environment, saying the approach would fast-track the development of NPDCs under-developed assets.
He informed that the project was expected to ramp up production at OML 65 from 900barrels per day to 60,000 barrels per day with average production over field life at 40,000 barrels per day.