Nigerian Oil Sector earns $48.04bn FDIs for 2018-2025 Projects -Baru

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By Etuka Sunday

The Nigeria oil and gas industry is still a major investment destination in Africa grossing over 24.8 per cent of foreign direct investments coming to the African continent.
This was disclosed by the Group Managing Director of Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, while declaring open the 2019 edition of the Nigeria Oil and Gas Strategic Conference and International Exhibition at the International Conference Centre in Abuja.
Dr. Baru said, out of about $194billion capital investment flow into Africa for the period 2018 to 2025, $48.04bn came to the Nigerian oil and gas sector for various development projects.
A Press Release by the Group General Manager, Group Public Affairs Division of the NNPC, Mr. Ndu Ughamadu, quoted the Group Managing Director of NNPC, as saying that the oil and gas industry was an essential building block in the nation’s economic growth.
Speaking on the theme of this year’s NOG Conference “Promoting Investment and Collaboration in Nigeria’s Oil and Gas Industry.
He said: “Nigeria holds about 2.2 per cent of global oil reserves. Our crude oil reserves have grown steadily from about 22 billion barrels in 1999 to 37.5billion barrels in 2018. Nigeria is home to the second largest crude oil reserves in Africa after Libya. Our crude oil production currently hovers around 2.2 -2.3 million barrels of oil per day (bopd). This was bolstered by the coming on stream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd.”
On the gas side, he said Nigeria has the 9th largest gas reserves in the world with an estimated proven and probable gas reserves of 201Trillion cubic feet (Tcf) and an upside potential of about of 600Tcf.
“In terms of gas production and utilization, Nigeria averages about 8.4bscfd. While only 18% of the production is consumed in the domestic market (Power, Industries and WAGP), 43% is exported as LNG, 32% is re-injected for enhanced oil recovery and other operational uses like fuel gas while 7% of total gas production is currently being flared”, he said.
The GMD stressed that the reserve figures by themselves did not mean anything unless investment in their development and production was driven in a sustainable and collaborative manner.
According to him, to encourage the existing players in the industry, particularly the traditional Joint Venture partners, NNPC undertook to settle all outstanding cash call arrears amounting to $5billion in 2016.
“Till date, we have defrayed over $2billion. All these efforts are geared towards sustaining investment and renewing investor confidence”, he stated.
Dr. Baru noted that in the last three years, the NNPC had been very active in the capital market assessing financing for different projects in order to sustain industry momentum, adding that the strategy was also used as a lever to promote collaboration.
He stated that between 2015 and 2017, the state oil corporation was involved in various project financing of over $3billion in new investment.
He listed some of the projects to include: the $1.2billion multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49, 90 and 95 under the NNPC/Chevron JV christened Project Cheetah; NNPC/SPDC JV ($1Billion) code named Project Santolina; NNPC/CNL JV ($780Million) code named Project Falcon; and NNPC/First E&P JV and Schlumberger ($700Million).
Baru stated that this year, the Corporation had significantly progressed new third party financings for the NNPC/SPDC JV and NNPC/MPNU JV with both transactions substantially over-subscribed.
“NNPC/SPDC Santolina III Project has an estimated cost of about $500million and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3billion (NNPC to raise circa $700 Million in third party financing). Furthermore, we have initiated third party financing for the NNPC/NAOC Okpai II Independent Power Plant (IPP) project with estimated cost of circa $658.42million and the NNPC/TEPNG Ikike development project with estimated cost of circa $473.4million to be funded through prepayment for gas by NLNG,” Baru enthused.
He revealed that the NNPC has successfully initialed the Memorandum of Understanding (Framework Agreement) between NNPC and NLNG for the provision of circa $2.5 Billion funding for NNPC’s portion of Cash Call payable on Upstream Gas Supply Projects for Shell Petroleum Development Company (SPDC), Total Exploration and Production Nigeria (TEPNG) and Nigeria Agip Oil Company (NAOC) Joint Ventures.
“We have, also, initiated negotiations for the Financing and Technical Services Agreements (FTSAs) for identified NPDC Assets – OMLs 13, 65 and 111. As you may be aware, NPDC currently contributes about 8% of current national daily production. Further developments from these assets and NPDC JV assets is expected to move NPDC to over 300bopd equity,” the NNPC helmsman quipped.
He maintained that the NNPC has progressed negotiations with Engineering, Procurement and Construction Contractors and potential Chinese lenders on the third party financing for the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project of $2.89 Billion.
On the Frontier Basins, Baru submitted that exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River -2 well in the Benue Trough with the findings in the Kolmani River -1 by SNEPCO being confirmed and a lot more interesting information being revealed by the well as it approaches total depth of 14,250ft.
Earlier in her welcome address, the Vice President of CWC Africa, organizers of the Conference, Wemimo Oyelana, said the conference aims to stimulate discussion around strategies that promote collaboration and draw investment into the country’s hydrocarbon industry.

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