Uche Usim, Abuja and Adewale Sanyaolu
The Federal Government’s dream to attain 40 billion oil reserves received a boost yesterday, as the Nigerian National Petroleum Corporation (NNPC), signed a $3.15billion Financing and Technical Services Agreement for the development of Oil Mining Lease (OML) 13.
The agreement for the development of OML 13 between Sterling Oil Exploration and Energy Production Company Limited (SEEPCO) and the exploration and production arm of NNPC, the Nigerian Petroleum Development Company (NPDC), aims at increasing daily oil production to 3million barrels per day.
OML 13 is 100 per cent owned by the NPDC and is located in the eastern axis of the Niger Delta covering a total area of 1987km².
Group Managing Director of NNPC, Mallam Mele Kyari, described the funding arrangement as “a game changer to oil and gas project financing in Nigeria”.
The GMD, 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 Federal Government is expected to earn over $10.2billion in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5billion after payment of the entire financing obligation. He advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder its operations.
The GMD 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, adding that the Financing and Technical Services Agreement was for a period of 15 years, while the $3.15billion ceiling funding would be provided by SEEPCO with a 10-year capital investment period and five years for cost recovery.
First oil of about 7,900bpd is expected from the project by April 1, 2020, while production would peak at 94,000bpd and 542mmscfd within four years.
On local content, the project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities.
Also speaking at the occasion, 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 Federal Government.