The group managing director of Nigerian National Petroleum Corporation, NNPC, Maikanti Baru, has said that the corporation has secured a total of $3.7bn in Alternative Financing Agreement in the last three years.
Speaking during the annual 35th conference of Nigerian Association of Petroleum Explorations, NAPE, in Lagos on Wednesday, Mr Baru said securing external funding arrangement is crucial to sustaining oil and gas production in Nigeria and ensuring the survival of Nigeria’s energy future.
“Within the last three years, we have embarked on several successful Alternative Funding Programs to sustain and increase the national daily production and productivity,” Mr Baru told delegates at the annual conference.
According to the GMD, the $3.7bn financing package included the $1.2Billion multi-year drilling financing package for 23 onshore and 13 offshore wells under NNPC/Chevron Nigeria Limited Joint Venture termed Project Cheetah.
The $2.5billion alternative funding arrangements for NNPC/SPDC JV ($1billion) termed Project Santolina; NNPC/CNL JV ($780million) termed Project Falcon as well as the NNPC/First E&P JV and Schlumberger Agreement ($700million).
Project Cheetah is expected to increase crude oil production by 41,000bopd and 127Mmscfd with a Government-take of $6billion over the life of the Project.
In the same vein, Projects Santolina, Falcon and the NNPC/First E&P JV and Schlumberger Funding Arrangement are expected to increase combined production of crude oil and condensate by 150,000bopd and 618MMscfd of gas with a combined Government-take of about $32Billion over the life of the Projects, Mr Baru added.
He stated that with average JV cash call requirement of about $600 million a month, coupled with flat low budget levels over the past years, the budgeted volumes were hardly delivered.
“The truth is that it is difficult to deliver the volumes without adequate funding. The low volumes and by extension low revenues had resulted in the underfunding of the Industry by Government, which has stymied production growth,” he observed.
Today, with the new Alternative Funding Arrangement in place, JVs will now relieve government of the cash call burden by sourcing for funds for their operations (estimated at $7-$9 billion annually).
“It is on record that key pieces of legislation such as the Marginal Fields Act and the Deepwater Fiscal Policies, the Nigerian Content Act, as well as the Unitization Policy were all based on templates that came out of previous NAPE Conferences,” he added.
