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NNPC/FIRST E&P seals $724m deal with Schlumberger



NNPC/FIRST E&P seals $724m deal with Schlumberger
  • FG’s oil taxes, royalties projection hits $5.60bn in OML83, 85

The Joint Venture (JV) between the Nigerian National Petroleum Corporation (NNPC) and FIRST Exploration and Production (E&P) has sealed a $724 million oil finance deal with Schlumberger. The deal, which was sealed in London at the weekend, is projected to earn Nigeria $5.60 billion in taxes and royalties. The deal, scheduled to generate $1.32 billion in net cash flows after Schlumberger’s cost recovery and compensation in line with the terms of the agreement, is for the Anyalu and Madu fields under Oil Mining Licence (OML) 83 and OML 85, offshore Nigeria.

The execution of the contractual agreement came one year after the parties signed the tripartite term sheet for the financing and technical services arrangement between NNPC/FIRST E&P JV and Schlumberger. Under the 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 Anyala and Madu fields 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. Speaking at the signing ceremony which was also attended by chief executives of other parties to the deal, Group Managing Director of NNPC, Dr. Maikanti Baru, said in arriving at the innovative alternative funding package, the corporation was guided by the need to instil transparent and accountable processes.

“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,” Baru was quoted in a statement issued by the Group General Manager, Group Public Affairs Division of NNPC, Ndu Ughamadu.

The NNPC/FIRST E&P JV project financing formula, Baru said, came as a creative approach to funding JV operations in response to the realities of the prevailing operat-ing environment.

The NNPC GMD said the Schlumberger financing package covers pre- Final Investment Decision (FID) funding, 100 per cent of capital expenditure for three years and pre-production operating expenses. Baru 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 and compensation in line with the terms of the agreement.

The OMLs 83 and 85 are in shallow waters 40km offshore in the Niger Delta. NNPC holds 60 per cent interest in the licences, while FIRST E&P, the operator of the JV, holds the remaining 40 per cent interest. Apart from providing funding for the development of the fields, Schlumberger would also provide other oilfield services to the JV on a limited exclusive basis. A joint project team would drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.

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  1. Pingback: NNPC/FIRST E&P seals $724m deal with Schlumberger — New Telegraph - Naijaray Headline

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