The Nigerian National Petroleum Corporation on Sunday announced that it had secured the closure of $875.75m alternative financing deal for the Nigerian Petroleum Development Company operated OML 65.
A statement issued by the NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, said the corporation had sealed a funding and technical services agreement with CMES-OMS Petroleum Development Company.
It also said the project was expected to generate over $6.35bn in taxes and royalties to the federation to support government’s medium to long-term economic development agenda.
According to the statement, Chief Financial Officer, Umar Ajiya, disclosed that the project’s scope cut across exploration, development, production and provision of facilities with incremental first oil targeted at the fourth quarter of 2020.
The oil target, he stated to Ajiya, was estimated to have potential reserves of 800 million barrels of oil equivalent with an ultimate recoverable reserve of 244 mmboe and cumulative production of 44mmboe from the Abura Main and Abura SE fields.
Speaking at the closing meeting with the financing partners in Dubai, United Arab Emirates, Ajiya described the contractor financing model as an innovative approach by the NPDC to funding its operations in response to the challenging economic environment.
He said the approach would fast-track the development of the NPDCs underdeveloped assets.
He stated that the project was expected to ramp up production at the OML 65 from 900 barrels per day to 60,000 barrels per day with average production over field life at 40,000 barrels per day.
Throwing more light on the financing strategy, the CFO explained that the package entailed comprehensive financing solution that would address the complex issues involved in growing the NPDC’s production.
Ajiya said the package would minimise the project’s cost of capital and maximise its value preservation, adding that it would strike a balance between risk and reward.
He said the expectation was that the collaboration between the NPDC and the CPDC would translate in real terms to efficient execution of the scope of activities for the optimal development of the OML 65 asset within cost and schedule, while maximising value to all the stakeholders.
He further stated that it was projected that the collaboration would enhance operational and financial performance strictly guided by the pre-agreed Key Performance Indicators which was critical for determining incentive payment due to the CPDC.