The Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited (CNL) have signed a $1.7 billion Alternative Financing Agreement for OMLs 90 and 91. The increased funding will enable the production of additional 39,000 barrels of crude oil in addition to natural gas and liquid condensate and liquids. GMD of the NNPC Maikanti Baru signed on behalf of the corporation and Jeff Ewing the Managing Director of CNL signed on behalf of the corporation.
Details of the agreement
The project includes the completion of the Sonam non-associated gas (“NAG”) well platform and Sonam living quarters platform; drilling of seven wells in the Sonam field and the Okan 30E NAG well; as well as the completion of the 20” x 32Km Sonam pipeline and Okan pig receiver platform and development of the associated facilities. The facilities are 100% completed while wells are 40% executed. T
Stage 1 which provided $400mn sourced from Nigerian Commercial Banks (NCBs) achieved financial close on 1st August 2017. Stage 2 , is set to provide $380mn from International Commercial Banks (ICBs). Out of the US$780mn total financing for both stages, Chevron’s Co-lending totals US$312 million while NNPC’s portion of the total facility stands at is US$468 million.
How both parties benefit
The government will have cost savings as it eliminates the need to provide for cash calls. The agreement provides Chevron the needed guarantee to raise financing for the project. This also increases the amount of gas produced in the country, which is essential for power generation.
Chevron is the third largest oil producer in Nigeria, and one of the largest investors in the country. The company operates several joint venture arrangements with the NNPC both offshore and onshore in the Niger Delta area.
The NNPC was established on April 1, 1977 and manages the joint venture arrangements between the Federal Government and several multinational oil corporations. The NNPC has several subsidiaries, two partly owned subsiaries , and 16 associated companies.