Nigeria To Earn $5.60b As NNPC Finalises Oil Financing Deal with Schlumberger

The Nigerian National Petroleum Corporation (NNPC), and Schlumberger on Sunday reached final contractual agreement for the Anyalu and Madu oil fields under Oil Mining Licences (OMLs) 83 and OML 85, offshore Nigeria.

In a statement sent to THE WHISTLER Newspapers, the deal, which was agreed over the weekend in London, would see Schlumberger provide $724.14 million out of the required project cost of $1.082 billion while the balance of $358.79 million would be funded with cash flows generated by the project.

Apart from providing funding for the development of the fields, NNPC also stated that Schlumberger would provide other oilfield services to the joint venture on a limited exclusive basis.

The Corporation explained further that a joint project team would drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the joint venture partners.

The agreement comes a year after a tripartite term sheet for the financing and technical services arrangement was signed between NNPC/FIRST E&P JV and Schlumberger for the Anyalu and Madu fields

Anyala and Madu fields are projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with production plateau of 50, 000 barrels of oil per day (bd) and 120 million standard cubic feet of gas per day (mmscuf/d).

Speaking at the signing ceremony, attended by chief executives of the other parties to the deal, Group Managing Director of NNPC, Dr. Maikanti Baru, said in arriving at the innovative alternative funding package, the corporation was guided by the need to instill transparent and accountable processes.

Baru explained that NNPC followed strict compliance with all extant laws, regulations and established governance protocols as well as overriding national interest and drive to achieve competitive market pricing for such a greenfield project.

Explaining further, the NNPC boss stated that the financing formula came as a creative approach to funding joint venture operations in response to the realities of the prevailing operating environment.

“Apart from aligning wholly with government’s aspiration of increased crude oil and gas production, reserves growth and monetisation of the nation’s enormous gas resources, the model is in tandem with one of the corporation’s 12 Business Focus Areas (BUFAs); ramping up crude oil and gas reserves and production which also supports government’s 7 Big Wins aspirations,” Baru was quoted as saying by the corporation’s Group General Manager Public Affairs, Mr. Ndu Ughamadu.

He said the Schlumberger financing package covers pre-Final Investment Decision (FID) funding, 100 per cent of capital expenditure for three years and pre-production operating expenses.

He added that the package would enable the country to generate $5.60bn in taxes and royalties and $1.32bn in net cash flows after Schlumberger’s cost recovery & compensation in line with the terms of the agreement.

The OMLs 83 and 85 are located in shallow waters 40 kilometres offshore in the Niger Delta, NNPC holds 60 per cent interest in the licences while, First E&P, the operator of the joint venture, holds the remaining 40 per cent interest.