NNPC Teams up with Chevron to Boost Crude Oil Production

SEATTLE (Oil Monster): The Nigerian National Petroleum Corporation (NNPC) has signed the second and final phase of an agreement with Chevron Nigeria Limited (CNL) which promises to boost the production of crude oil and gas. The ‘Alternative Financing Agreement’ was signed between both parties in a meeting held in London last weekend. The execution of the deal is expected to increase the country’s crude oil production by nearly 39,000 barrels a day. In addition, the deal would also help the country achieve an incremental peak production of approximately 283mmscfd of gas.

Dr. Maikanti Baru, Group Managing Director signed the agreement on behalf of NNPC. He noted that the project is expected to cost around $1.7 billion. Almost 92% of the project now stands completed with Chevron already spending nearly $1.5 billion. It must be recalled that first phase of financing agreement was executed in August this year.

The second phase of the agreement covers the $780 million in completion of the project’s scope. Out of this $400 million in funding is required towards development of seven oil wells in Sonam and Okan oilfields in Niger Delta. Also, the remaining $380 million in funding would be utilized towards reimbursing the JV partners.

It must be noted that the first stage of the agreement had sourced $400 million from Nigerian Commercial Banks. The second stage will provide the balance $380 million from International Commercial Banks. Out of the total financing for both stages, Chevron accounted for $312 mm, whereas NNPC’s share of the facility stands at $468 million.

Speaking at the signing-in ceremony, the incremental production would spread over the remaining life period of the asset. He described the deal as a step in the right direction and noted that it would contribute significantly to the country’s daily output. Further, the deal is in support of the Federal Government’s strategic goals to strengthen diversified gas-to-power projects.

Meantime, Mr. Jeff Ewing, Managing Director at CNL reaffirmed the company’s support to all efforts towards sustained oil and gas production in the country. He commended Dr. Baru and other partners for supporting the third party financing agreement. In addition, he also emphasized Chevron’s commitment in delivering the project within the stipulated timeframe with no compromise on its safety, thereby assuring best results to its stakeholders.