The Nigerian National Petroleum Corporation (NNPC) announced that two sets of alternative financing deals on joint venture projects to boost oil reserves and production were signed in London last week between it and two of its JV partners.
The partners are the NNPC/Chevron Nigeria Limited JV and NNPC/Shell Petroleum Development Company JV and said the two projects were expected to generate incremental revenues of about $16bn within the assets’ life cycle and would boost gas supply to power plants.
The NNPC stated that 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 211 million barrels and proven and probable gas reserves of 1.9 trillion cubic feet within Oil Mining Licences 90 and 91.
The spokesperson of the corporation, Mr. Ndu Ughamadu, said in a statement issued in Abuja that the project was expected to begin to bear fruits in the next three to six months.
The Group Managing Director, NNPC, Dr. Maikanti Baru, who signed for the corporation, said the project was envisaged to achieve an incremental peak production of about 39,000 barrels per day of liquids and 283 million standard cubic feet of gas per day.
The JV partner, he said, had already expended $1.5bn, representing 97 per cent of project completion costs, adding that the agreement would cover the remaining $780m to complete the project’s scope.
Providing a breakdown of the expected funding requirements of the Sonam Project, Baru said $400m was to fund the development of seven wells in the Sonam field (OML 91), the Okan 30E non-associated gas well (OML 90), and associated facilities, including completion of the Sonam NAG Well Platform.
He said $380m would 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 stated that the Sonam Project, on fruition, would net the Federal Government cumulative incremental earnings of $7.3bn over the project’s life.
The agreement with the SPDC, on the other hand, will facilitate the development of the NNPC/SPDC JV Project Santolina, which comprises of 156 development activities across 12 OMLs and 30 different fields in the Niger Delta.
Baru said the development of the Sonam Project would be carried out in two phases.
The first phase will focus on short term activities involving oil and gas generation programme, comprising 128 rig-less activities and 10 workovers, while the second phase will focus on medium term activities that will involve further development of the EA/EJA fields by drilling 14 new wells and three workover ones.
Baru said the first phase of the project was estimated to deliver incremental liquid reserves of about 202.9 million barrels of oil and 161.8 billion cubic feet of gas on proven and probable basis.