Nigeria: Chevron, NNPC secure $1.2 billion for drilling of 36 wells

The Nigerian National Petroleum Corporation (NNPC) has secured a $1.2 billion multi-year drilling financing package for 12 offshore and 23 onshore oil wells under the NNPC/Chevron Nigeria Limited Joint Venture.

According to the NNPC, the funding package is being financed by a consortium of Nigerian and international lenders, and is an integral part of the Accelerated Upstream Financing Programme initiated by NNPC.

The state-run company also says that the initiative would help in the maintenance of current production levels in the short term as well as replacing depleting reserves.

$1.2B for 23 onshore and 13 offshore wells

The agreement was signed with Chevron JV in London over the weekend. NNPC says that the $1.2bn is to be transferred into the development of 23 onshore and 13 offshore wells on OML 49, 90 and 95  in two stages over 2015-2018.

NNPC explained that stage one, comprising 19 wells, would be projected to deliver 21, 000 barrels of crude oil and condensate per day alongside 120, 000million standard cubic feet of gas per day (mmscf/d) over 2015 and 2016.

Stage two, comprising 17 wells, is projected to yield 20, 000 barrels of crude oil and condensate per day alongside gas production of 7 mmscf/d between 2016 and 2018.

It is expected that both stages of the project would generate $2 to $5 billion of incremental revenue to the Federation account, the NNPC says.

Boosting domestic gas aspirations

Beyond the contribution to the national treasury, the projected peak incremental gas production of 127 mmscf/d, which is the electricity equivalent of 400 megawatts, would help boost the Federal Government’s domestic gas aspirations with expectant positive effect on power supply.

NNPC said that Dr. Ibe Kachikwu, Group Managing Director of the NNPC, described the new alternative funding arrangement as the new contractual model in upstream financing which would serve as a template for future initiative to supplement the Federal Government’s Joint Venture Cash Call commitment.

Kachikwu noted that the Corporation will not relent in the renewed effort to restore probity and transparency to the process of generation, collection and remittance of crude oil proceeds.

“I have always believed that issues of Federation Accounts must be left sacrosanct and not be toyed with. The Accelerated Upstream Financing Programme is designed to help us achieve this objective,’’ he said.

Clay Neff, Managing Director of Chevron Nigeria Limited pledged the readiness of Chevron to work assiduously with the NNPC to meet its set target in the project, the Nigerian oil company said.

As said by the NNPC, with the completion of its financing, Project Cheetah stands as the first project under the Accelerated Upstream Financing Programme of the NNPC. The project is operated under the NNPC/CNL JV which is owned on a 60-40 basis in favour of the NNPC.

The NNPC concluded its announcement by stating that project Cheetah was projected to achieve a peak incremental production of 61 million barrels of oil equivalent per day.

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