The Nigerian National Petroleum Corporation (NNPC), has projected that government would rake in about $6.35 billion in taxes and royalties from the OML 65 project on completion..
The Corporation’s Chief Financial Officer, Mr. Umar Ajiya, gave this hint in his remarks during the round-off meeting held with the financing partners in Dubai, United Arab Emirates.
Ajiya confirmed that the project, being operated by the Nigerian Petroleum Development Company (NPDC), had secured a $875.75 million alternative financing deal through the Funding and Technical Services Agreement with CMES-OMS Petroleum Development Company (CPDC).
According to him, the project with scope spanning exploration, development, production and provision of facilities with incremental first oil targeted for the fourth quarter in 2020, is 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.
The CFO said that during the project’s lifespan, it was estimated that over $6.35 billion would be generated in taxes and royalties to support government’s ongoing medium to long-term economic development agenda
The industry expert described the contractor financing model as an innovative approach adopted by the NPDC to fund the execution of the OML 65 project, adding that the approach will fast-track the development of NPDCs under-developed assets.
Ajiya expatiated further that the project was expected to increase the OML 65 production from 900 barrels per day (b/d) to 60,000 barrels per day with average production over field life at 40,000 barrels per day.
Making further clarification on the financing deal and its socio-economic potential for Nigeria, he explained that the package entailed comprehensive financing solution that seeks to address the complex issues relating to growing the NPDC’s production, minimize its cost of capital and maximizes its value preservation and operational efficiency.
The CFO pointed out that the financing deal was designed to achieve a balance between risk and reward which gives investors a rate of return that is commensurate with funding a brownfield project.
Ajiya said further that the expectation was that the collaboration between NPDC and CPDC would lead to the efficient execution of the scope of activities for the optimal development of the OML 65 asset within cost and schedule as well as maximize value of returns of investment for all the stakeholders.
He clarified that it was projected also that the collaboration would enhance operational and financial performance strictly guided by the pre-agreed Key Performance Indicators (KPIs) which remain critical for determining incentive payment due to the project funding partners.
Elaborating on CPDC’s right to provide technical services, Ajiya listed field of consideration to involve drilling and completion services; building capacity and technology transfer; generating employment opportunities for youths with the attendant positive multiplier effects on the nation’s economy, amongst others.
