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NNPC SIGNS JOINT VENTURE AGRREMENT WITH SHELL, CHEVRON TO INCREASE REVENUE BY $16B

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Two sets
of financing agreements on Joint Venture (JV) projects, to boost reserves and
production in line with government’s aspiration, have been signed in London
between the Nigerian National Petroleum Corporation (NNPC) and two of its JV
partners: Chevron Nigeria Limited (CNL) and Shell Petroleum Development Company
(SPDC).

The two projects are expected to generate
incremental revenues of about $16billion within the assets’ life cycle
including a flurry of exploratory activities that would generate employment
opportunities in the industry, boost gas supply to power and rejuvenate
Nigeria’s industrial capacity utilization.
The NNPC Group General Manager, Public Affairs
Division, Mr Ndu Ughamadu made this disclosure in a statement on Thursday.
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 211million barrels and proven and probable gas reserves of 1.9 trillion
cubic feet within in Oil Mining Licences (OMLs) 90 and 91.
Speaking at the signing ceremony, Group
Managing Director of the NNPC, Dr. Maikanti Baru, said the project, expected to
begin to bear fruits in next three and six months, is envisaged to achieve an
incremental peak production of about 39, 000 barrels per day of liquids and
283million standard cubic feet of gas per day (mmscf/d) of gas respectively
over the life cycle of the asset.
It was revealed that the JV partner had
already expended $1.5billion representing 97 per cent of project completion
costs, adding that the agreement would cover the remaining $780million to
complete the project’s scope.
Providing a breakdown of the expected funding
requirements of the Sonam Project, Dr. Baru said $400million is to fund the
development of seven wells in the Sonam field (OML 91), the Okan 30E
Non-Associated Gas (NAG) well (OML 90), and associated facilities including
completion of Sonam NAG Well Platform.
The GMD added that $380million would also be
required to reimburse the JV partners for the 2016 portion of the funds
committed to lenders that had been cashed and paid for adding that the Sonam
Project alone, on fruition, would net the Federal Government cumulative
incremental earnings of $7.3billion over the project’s life.
The agreement with SPDC, on the other hand,
would facilitate the development of the NNPC/SPDC JV Project Santolina which
comprised of 156 development activities across 12 OMLs (OMLs 11, 17, 23, 25,
27, 28, 32, 35, 43, 45, 46 and 79) and 30 different fields in the Niger Delta.
The GMD put the total third-party financing
for Project Santolina at $1billion, inclusive of financing cost of which, he
said, co-lending amounted to $420mm with NNPC’s portion of $850million.

He stated that Project Santolina would
generate about $9billion of incremental revenue to the Federation Account over
the project’s life cycle and a Net Profit Value (NPV) of $5.2billion over the
loan life at 8 per cent discount rate.
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