Schlumberger to provide $724m as NNPC concludes JV financing deal
Bukola Odufade is Businessamlive Reporter.
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Nigeria’s state owned oil corporation, NNPC has announced that it has completed the final stage of the financing and technical services arrangement between NNPC/First E&P JV and Schlumberger for the Anyalu and Madu fields under oil mining license OML 83 and OML 85 offshore Nigeria.
According to the signed agreement, global oil services giant, Schlumberger would provide $724.14 million out of the required project cost of $1.082 billion while the balance of $358.79 million is to be funded with cash flows generated by the project.
The OMLs 83 and 85 are in shallow waters, offshore in the Niger Delta. NNPC holds 60 percent interest in the licenses while, FIRST E&P, the operator of the JV, holds the remaining 40 percent interest.
The Anyala and Madu fields (OML 83 and OML 85) are projected to have 193 million barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with production plateau of 50, 000 barrels of oil per day and 120 million standard cubic feet of gas per day.
Apart from providing funding for the development of the fields, the agreement also stated that Schlumberger would also provide other oilfield services to the JV on a limited exclusive basis, and while Nigeria can leverage on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.
Speaking at the event, Maikanti Baru, group managing director of NNPC, described the alternative funding package “as a creative and innovative one ” and said that the Schlumberger financing package covers pre-Final Investment Decision (FID) funding, 100 percent of capital expenditure for three years and pre-production operating expenses.
He also added that the package would enable the country to generate $5.60 billion in taxes and royalties and $1.32 billion in net cash flows after Schlumberger’s cost recovery & compensation in line with the terms of the agreement.
He further added that NNPC also followed strict compliance with all extant laws, regulations and established governance protocols as well as overriding national interest and drive to achieve competitive market pricing for such a greenfield project.