UGO AMADI, Business Editor
The Nigerian National Petroleum Corporation has secured a total of $3.7bn in Alternative Financing Agreement in the last three years, Group Managing Director of the Corporation, Dr. Maikanti Baru has said.
Dr. Baru, who made this known while speaking at the 35th Annual Conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos on Wednesday, said securing external funding arrangement was crucial to sustaining oil and gas production in Nigeria and ensuring the survival of Nigeria’s energy future.
“Within the last three years, we have embarked on several successful Alternative Funding Programmes to sustain and increase the national daily production and producibility,” Dr. Baru told delegates at the annual conference.
According to the GMD, the $3.7billion financing package included the $1.2Billion multi-year drilling financing package for 23 onshore and 13 offshore wells under NNPC/Chevron Nigeria Limited Joint Venture termed Project Cheetah and the $2.5Billion alternative funding arrangements for NNPC/SPDC JV ($1Billion) termed Project Santolina; NNPC/CNL JV ($780million) termed Project Falcon as well as the NNPC/First E&P JV and Schlumberger Agreement ($700Million).
Project Cheetah is expected to increase crude oil production by 41,000bopd and 127Mmscfd with a Government-take of $6Billion over the life of the Project.
In the same vein, Projects Santolina, Falcon and the NNPC/First E&P JV and Schlumberger Funding Arrangement are expected to increase combined production of crude oil and condensate by 150,000bopd and 618MMscfd of gas with a combined Government-take of about $32Billion over the life of the Projects, Dr. Baru added.
He observed that evolving a new funding mechanism for the JV operations was a critical part of President Muhammadu Buhari’s far-reaching reforms aimed at eliminating cash call regime, enhancing efficiency and guaranteeing growth in the nation’s oil and gas industry.
Explaining further, Dr. Baru noted that as a result of the cash call underfunding challenge which rose to about $1.2bn in 2016 alone, NNPC and its JV partners began exploring alternative funding mechanisms that would allow the JV business finance itself in order to sustain and grow the business.
He added that with average JV cash call requirement of about $600 million a month, coupled with flat low budget levels over the past years, the budgeted volumes were hardly delivered.
“The truth is that it is difficult to deliver the volumes without adequate funding. The low volumes and by extension low revenues had resulted in the underfunding of the Industry by Government, which has stymied production growth,” he observed.
Today, with the new Alternative Funding Arrangement in place, JVs will now relieve Government of the cash call burden by sourcing for funds for their operations (estimated at $7-$9 billion annually).
Dr. Baru, who spoke on the theme: “Review of the Current State of Funding for the Upstream Sector and the need for a New Policy Initiative”, commended NAPE for its contributions towards shaping the Oil and Gas landscape in Nigeria, said it was incumbent on NNPC to associate with such a professional body for the benefit of the nation.
“It is on record that key pieces of legislation such as the Marginal Fields Act and the Deepwater Fiscal Policies, the Nigerian Content Act, as well as the Unitization Policy were all based on templates that came out of previous NAPE Conferences,” he said.
Corroborating Dr. Baru’s case for Alternative Funding, former GMD of NNPC, Engr. Funsho Kupolokun, called for fresh approaches such as the involvement of more indigenous participation to address the challenges of funding upstream operations in the country.
Earlier in his speech, President of NAPE, Mr. Abiodun Adesanya, described the challenge of cash call as very critical because it affects all the objectives and targets of growing the reserves and increasing crude oil production in the country.
This year’s NAPE Conference has as its theme: “Beyond Cash Call: New Funding Strategies for the Nigerian Upstream Oil & Gas Industry.
…..PENGASSAN backs corporation on exploration in Inland Basins
..Says NNPC can return refineries to profitability
The Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN) has commended the Nigerian National Petroleum Corporation (NNPC) on the exploratory activities it has been spearheading in inland basins.
PENGASSAN National President, Comrade Francis Johnson, who stated in Abuja when he led the Central Working Committee (CWC) of the union on a courtesy visit to the NNPC Group Managing Director, Dr. Maikanti Baru, said the yeoman job being undertaken by the NNPC with regards to the frontier basins would benefit the nation ultimately.
Johnson said the union’s fervent prayer was for a breakthrough to be achieved in the Corporation’s exploratory efforts in the basins.
The Management of NNPC under the leadership of Dr. Baru, has in recent time, embarked on aggressive exploratory operations in the nation’s frontier basins of the Chad Basin and Benue Trough in line with the aspiration of the Administration of President Muhammadu Buhari to increase the reserves base of the country.
Dr. Baru, since assumption of office last year, has drummed up support for the exploration activities with critical stakeholders in Bauchi, Borno, Sokoto and Nassarawa State.
In Nassarawa State recently, he disclosed that NNPC’s Frontier Exploration Services (FES), a services company of the Corporation, had mobilized the Integrated Data Services Ltd (IDSL), (an Upstream arm of the NNPC) to acquire seismic data in the Benue Trough commencing from the Keana area.
At the visit to the GMD, the PENGASSAN National President also commended the NNPC GMD for collaborating with other government agencies and critical stakeholders to bring about efficiency in the Petroleum Industry, adding that his efforts has also led to the improved products supply situation being enjoyed in the country.
Comrade Johnson said the NNPC Management was capable of returning the refineries to profitability, while expressing the union’s confidence on the Corporation’s effort in that regard.
“PENGASSAN will support any effective, efficient and sustainable model that can make the refineries viable,’’ Comrade Johnson said.
He also called on the GMD to intensify the ongoing rehabilitation of the downstream facilities, especially the depots, pipelines, tank farms and jetties to further ensure seamless supply of products across the country.
On the Petroleum Industry Bill, the PENGASSAN President emphasized the need for its speedy passage, adding that the unions were ready to collaborate with the National Assembly to resolve knotty issues associated with it.
Responding, Dr. Baru disclosed that President Muhammadu Buhari had mandated him and the NNPC Management to bring back the refineries to their glorious days and thanked the unions for their belief in his capability to deliver on the president’s mandate.
He said funding had been a major challenge in the rehabilitation of the refineries but was however optimistic that the various options being explored would yield positive results.
The GMD expressed appreciation to the unions for their support in his effort to move the Petroleum Industry forward, while lauding their pragmatic approach to handling issues, saying this has helped to bring about industrial harmony.
On his part, Chief Operating Officer (COO), Corporate Services, Alhaji Isah Inuwa, urged the unions to continue to work on the part of amity, while assuring them of NNPC management’s readiness to continue to collaborate with them in the overall interest of the Industry and the nation.
For a better society.