The Nigerian National Petroleum Corporation (NNPC) and ExxonMobil Nigeria Limited have signed $1.5b exploration financing agreement to boost the nation’s crude oil reserve and production.
The agreement was signed on behalf of the NNPC by its Group Managing Director, Engr Austin Oniwon while Mr Mark Ward, signed on behalf of the ExxonMobil Limited.
“The benefit of the project to the nation is incremental production and reserve addition to the tune of 55, 000 barrels per day and 85m barrels respectively effective next one or two months,” Engr Oniwon stated.
He explained that the signing of the agreement was the sixth in line with external financing agreement between NNPC and Exxon Mobil Joint Venture projects.
According to Oniwon, the external financing was a creative strategy to raise fund to continue to grow the national hydrocarbon assets to be able to assist in a situation where the nation is cash strapped.
He stated that the NNPC has negotiated strongly in the agreement and believed that the outcome was a win-win situation as there were “no winners and no losers”.
The GMD explained that the total cost of the project was about $1.5m out of which the JV took $900m as loan from commercial banks ($450m each from Nigerian and International banks respectively).
He listed the UBA, Skye, Fidelity and Eco Banks as among the nine Nigerian banks involved in the funding, adding that their inclusion was is in fulfilment of the Nigerian Content Act.
The GMD disclosed that there were also foreign banks involved in the funding of the project. They include: Standard Chartered, HSBC, RAND Merchant, ABSA and NET Banks.
“We also have our partners as co-lenders, who lend us $600m making a total of $1.5b for the project,” Oniwon has stated.
He observed that the NNPC contributed the sum of $900m making 60 percent of the total cost of the project as part of the 2012 appropriation act.
“We will continue to put scheme like this with our partners to ensure that we relieve the government of financial burden and still be able to grow the nation’s hydrocarbon resources,” the GMD stated.
In his remarks, the MD ExxonMobil, Mr Mark Ward stated that his company was very proud to be part of the project, stressing that the agreement was a special one that could be repeated in subsequent years as desired in order to continue with the developmental process of the JV resources.
He added that ExxonMobil has over 600 global prospects but putting wells into production is always facing funding challenge. He however expressed confidence that the signing of the financing agreement would address some of those issues and also increase government revenue.
Mr Ward sated that one of the important parts of the financing agreement was 150 per cent of the fund coming from the Nigerian banks which was very significant to Nigerian Content Act.