Corporation (NNPC) to increase crude oil production and grow the
nation’s revenue profile gained momentum with the closure of $875.75m
alternative financing deal for the Nigerian Petroleum Development
Company (NPDC) operated OML 65 through the Funding and Technical
Services Agreement with CMES-OMS Petroleum Development Company (CPDC).
A release by NNPC Group General Manager, Group Public Affairs Division,
Mr. Ndu Ughamadu, stated that NNPC Chief Financial Officer, Mr. Umar
Ajiya, disclosed that the project, which scope cuts across exploration,
development, production and provision of facilities with incremental
first oil targeted for Q4 2020, was estimated to have potential reserves
of 800 million barrels of oil equivalent (mmboe) with an ultimate
recoverable reserve of 244 mmboe and cumulative production of 44mmboe
from the Abura Main and Abura SE fields.
Mr. Ajiya explained that over the project’s life, it 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
Speaking at the closing meeting with the financing partners in Dubai,
United Arab Emirates, Mr. Ajiya, described the contractor financing
model as an innovative approach by NPDC to funding its operations in
response to the challenging economic environment, saying the approach
would fast-track the development of NPDCs under-developed assets.
He informed that the project was expected to ramp up production at OML
65 from 900barrels 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 addresses the
complex issues involved in growing NPDC’s production, minimizes its cost
of capital, and maximizes its value preservation, adding that it also
strikes a balance between risk and reward which gives investors a rate
of return that is commensurate with funding a brownfield project which
has significant exploration risk.
He said the expectation was that this collaboration between NPDC and
CPDC would translate in real terms to the efficient execution of the
scope of activities for the optimal development of the OML 65 Asset
within cost and schedule, whilst maximizing value to all the
stakeholders.
He said it was projected that the collaboration would enhance
operational and financial performance strictly guided by the pre-agreed
Key Performance Indicators (KPIs) which remains critical for determining
incentive payment due to CPDC.
On CPDC’s right to provide technical services, the CFO listed the field
of consideration in this regard to include: drilling and completion
services; building capacity and technology transfer; generating
employment opportunities for youths with attendant positive multiplier
effect on the nation’s economy, among other considerations.