The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, has disclosed that the corporation has agreed to a $2.5 billion financing with a Chinese lender for pipeline project in Nigeria.
Kyari also said that the attacks on Saudi Arabia’s crude processing plant and fields can be a “big challenge” for the oil market if the outage was protracted.
The NNPC boss who stated this in an interview with Bloomberg TV, said it was a pipeline contractor project which would deliver 3, 600 megawatts (MW) of power and supply two billion standard cubic feet (SCF/d) of gas.
He added that the corporation had secured 15 per cent owner financing from the Chinse firm, which is close to $430 million already, and that the NNPC was expecting closure of 85 per cent, which amounts to about $2.5 billion.
Kyari said: “As you mentioned, it is a pipeline contractor project that will deliver 3,600 megawatts of power at the first instance and also particularly supply two billion SCF/d of gas which is quite significant in the contest of our current situation. And of course financing is everything. What we did is to get a Chinese company. It has been a long conversation and it is very close to financial closure.
“In the first instance, we have secured 15 per cent owner financing, close to $430 million is on ground in our account and we are expecting closure of 85 per cent which is about $2.5 billion. So, once that is closed we expect that the pipeline will be delivered on schedule.
“The financing will be closed in maximum of six months period. We are adding 3, 600 megawatts of power from three captive power plants to be located in Abuja Kaduna and Kano. What that means is that you are going to add additional capacity which will spur up industrialisation in these locations with these power plants”.
Explaining the delays in delivering the deep offshore oil projects, he said it was “probably because of the issue of the fiscal environment that is not certain and then a number of issues with our partners. That kind of stalled the processes of taking FID in these projects. What we did differently was to have some commercial closure in some of the disputes and we are very close to one of them.
“And once we are able to take FID on particularly the Bonga South West which will be very soon and then others will follow. And of course, that will open up new frontiers of opportunities in the deep offshore”.
On Nigeria’s readiness to comply with OPEC’s move to reform the oil market, Kyari said: “As you are aware, Nigeria is a strong pillar in OPEC, and of course we did have issues with our production system which kind of saw us going down, production coming up without very clear determination.
“What is different today is that we can see some projector on our production. We are more stable now, and the environment is much more secure. And that means we can plan around our production. And that is why Nigeria came out to say we are going to comply with
the reforming conformity. I don’t see any challenge doing that”.