The Nigerian National Petroleum Corporation (NNPC) and its exploration and production arm; the Nigerian Petroleum Development Company (NPDC), has signed a $3.15bn financing and technical services agreement with Sterling Oil Exploration and Energy Production Company Limited (SEEPCO) for the development of Oil Mining Lease (OML) 13.
OML 13 which covers a total area of 1987 square kilometre, is located in the eastern axis of Niger Delta and is fully owned by the Nigerian Petroleum Development Company (NPDC).
According to the NNPC spokesperson, Mr Ndu Ughamadu, who quoted the Group Managing Director, Mallam Mele Kyari, the funding arrangement is:
“a game-changer to oil and gas project financing in Nigeria.”
The NNPC had earlier indicated it’s the plan to increase the nation’s crude oil reserves by raising daily oil production to three million barrels per day.
The GMD who was represented by the Chief Operating Officer, Upstream, Mr Roland Ewubare, expressed appreciation to President Muhammadu Buhari, for approving the transaction. According to Mr Ewubare, OML 13 holds strong potential both for the petroleum industry and the nation’s economy.
The GMD said that the Federal Government is expected to earn over $10.2 billion in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5 billion after payment of the entire financing obligation. He further advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder operations.
Some Details of the Agreement
Through the statement, the GMD disclosed that the acreage had over 926 million stock tank barrels (mmstb) and 5.24 trillion cubic feet (tcf) respectively of oil and gas reserves.
The project is expected to produce its first oil of about 7,900bpd by 1st April 2020, the professional analysis also projects the production to peak at 94,000bpd and 542mmscfd within the first four years.
The OML project is expected to provide over 2,000 direct and indirect job opportunities in the region.
He further added that the Financing and Technical Services Agreement was for a period of 15 years while the $3.15 billion ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.
SEEPCO’s Chairman, Mr Tony Chukwueke, also showed joy at the opportunity offered to SEEPCO to support the production and reserves growth aspiration of the Federal Government.