The Nigerian Petroleum Development Company (NPDC) has signed a $3.15 billion Financing and Technical Services Agreement with Sterling Oil Exploration and Energy Production Company Limited (SEEPCO) for the development of Oil Mining Lease (OML) 13.
OML 13 is owned 100 percent by the NPDC, which is the exploration and production arm of the state-run Nigerian National Petroleum Corporation (NNPC), and is located in the eastern axis of the Niger Delta covering a total area of 1987km².
A statement by the Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ndu Ughamadu, said that the Group Managing Director of the NNPC, Mr. Mele Kyari, described the funding arrangement as “a game changer to oil and gas project financing in Nigeria”.
Kyari, 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 potential both for the petroleum industry and the nation’s economy.
He disclosed that the Nigerian government is expected to earn over $10.2 billion in royalties and taxes from the project over the next 15 years, while the NNPC would earn over $5 billion after the payment of the entire financing obligation.
He advised the management of the 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, and 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.
In his remarks, the Chairman of Sterling Oil Exploration and Energy Production Company Limited, Mr. Tony Chukwueke, expressed delight at the opportunity offered the company to support the production and reserves growth aspiration of the Nigerian government.
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.
The project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities.
GIK/APA