NNPC, SPEECO enter $3.15bn agreement to finance OML 13

The Nigerian National Petroleum Corporation (NNPC) has signed a $3.15 billion financing and technical services agreement with Sterling Oil Exploration and Energy Production Company Limited (SEEPCO).

The agreement which was signed on Tuesday through its subsidiary, Nigerian Petroleum Development Company (NPDC), involves the development of Oil Mining Lease (OML) 13.

OML 13, located in the eastern axis of Niger Delta, is 100 per cent owned by the NPDC. It covers a total area of 1987 square kilometre.

NNPC’s Group General Manager, Group Public Affairs Division, Ndu Ughamadu, quoted the Group Managing Director, Mallam Mele Kyari, as describing the funding arrangement as “a game changer to oil and gas project financing in Nigeria”.

With this, The NNPC plans to increase the nation’s crude oil reserves by raising daily oil production to three million barrels per day.

The GMD, who was represented by the Chief Operating Officer, Upstream, Mr. Roland Ewubare, expressed gratitude to President Muhammadu Buhari, for approving the transaction, adding that OML 13 held strong potentials both for the petroleum industry and the nation’s economy.

According to statement by Ughamadu, the GMD disclosed that the Federal Government is expected to earn over $10.2 billion in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5 billion after payment of the entire financing obligation.

He advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder operations.

Kyari disclosed that the acreage boasts of over 926 million stock tank barrels (mmstb) and 5.24 trillion cubic feet (tcf) respectively of oil and gas reserves, adding that the Financing and Technical Services Agreement was for a period of 15 years while the $3.15 billion ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.

First oil of about 7,900bpd is expected from the project by April 1, next year, while production is expected to peak at 94,000bpd and 542mmscfd within four years.

On local content, the project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities.

Also speaking, SEEPCO’s Chairman, Mr. Tony Chukwueke, expressed delight at the opportunity offered his company to support the production and reserves growth aspiration of the Federal Government.