The quest by the Nigerian National Petroleum Corporation (NNPC) to increase the nation’s crude oil reserves and daily oil production to 3million barrels per day has received a major boost with the signing of a $3.15bn Financing and Technical Services Agreement between Sterling Oil Exploration and Energy Production Company Limited (SEEPCO) and the exploration and production arm of NNPC, the Nigerian Petroleum Development Company (NPDC), for the development of Oil Mining Lease (OML) 13.
OML 13 is 100 per cent owned by the NPDC and is located in the eastern axis of the Niger Delta covering a total area of 1987km².
A press release by the Group General Manager, Group Public Affairs Division, Ndu Ughamadu, quoted the Group Managing Director of NNPC, Mallam Mele Kyari, as describing the funding arrangement as “a game changer to oil and gas project financing in Nigeria”.
The GMD, who was represented by the Chief Operating Officer, Upstream, Roland Ewubare, expressed gratitude to President Muhammadu Buhari, GCFR, for approving the transaction, adding that OML 13 held strong potentials both for the petroleum industry and the nation’s economy.
He disclosed that the Federal Government is expected to earn over $10.2bn in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5bn 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.
The GMD 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 $3.15bn 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 1st April, 2020, 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.