THE Nigerian National Petroleum Corporation, NNPC, said it’s in talks with financiers to raise as much as $4.1 billion and will seek to sign service deals to increase production from three leases.
The NNPC, is in discussions with Lagos-based Sterling Oil Exploration & Energy Production Co. to raise $3.15 billion and CMES-OMS Joint Venture Ltd. for $991.1 million, the company said in a statement. The funds will be used to develop oil leases holding more than 400 MMbbl of crude reserves, which are operated by the NNPC’s Nigerian Petroleum Development Co. unit, it said.
Nigeria pumps about 1.78 MMbopd while the state oil company’s exploration and production unit averages about 240,000 bpd. It wants to more than double daily output to 500,000bbl and boost daily gas production to 1.5 Bcf by next year.
The NNPC has paid $993.7 million of outstanding cash contributions by September to joint venture partners including Royal Dutch Shell Plc, Total SA and Eni SpA, it said in the statement. The company still owes $3.95 billion in arrears.
Last year, the NNPC signed financing agreements worth $2.3 billion with joint venture partners and other third parties, it said. It has also agreed to fund gas projects with Nigeria LNG Ltd., Africa’s biggest gas liquefier, for $2 billion, the company said.
It would be recalled that the International Oil Companies (IOCs) recently commended the Nigerian National Petroleum Corporation (NNPC) on the settlement of all the Joint Venture (JV) cash calls arrears.
They added that investment confidence and appetite were gradually coming back to the industry following the settlement of joint venture (JV) cash call arrears owed them by the NNPC.
The NNPC in December 2016 got a discount of $1.7 billion from $6.8 billion cash call debt to its JV partners, and was asked to pay $5.1 billion instead.
The IOCs include Mobil Producing Nigeria Unlimited (MPN); Shell Petroleum Development Company (SPDC); Total Upstream Companies in Nigeria (TEPN); and Chevron Nigeria Limited (CNL) among others.
The chief executives of the IOCs who spoke, during the last edition of the Nigerian Oil and Gas conference, on investment opportunities in the sector said they were glad the issue which obstructed negotiations for investments in Nigeria at their boards, was now off.
“For as long as I have been in this industry, we have been discussing cash call as a never-ending issue, I think that we were able to sit down together as an industry and government to try and tackle that issue and we should not underrate the importance of that.
“What that has done is that it opens up the appetite to have a conversation about investment.
“Nigeria is competing for capital with every other country in the world and sometimes we forget that and think that we are world unto ourselves, but the reality is that each of these companies operate in 20, 30, 80 countries and people are competing for capital,” said Osagie Okunbo, Country Chair of Shell companies in Nigeria and Managing Director of SPDC.
Osunbor further stated: “If the first thing that happens in your discussion is that debts that has been properly incurred are not being paid by your majority partner, it moves that argument before you may even start a conversation.
“What is of significant today is that argument is off the table. For the first time, we finished a year without NNPC owing cash calls.
“I have a current CFO in Shell who was here five years ago and just returned, he says he cannot believe what is happening. Essentially what he spent his time here was chasing cash calls from NNPC, today, he doesn’t have to do that. That just essentially opens up the appetite.”
and then