By Sebastine Obasi, Mike Eboh & Prince Okafor

LAGOS—THE Group Managing Director of the Nigerian National Petroleum Corporation, NNPC, Dr. Maikanti Baru, yesterday said the corporation has secured $3.7 billion in alternative financing agreement in the last three years.

Baru, who disclosed this at the 35th  Annual Conference of the Nigerian Association of Petroleum Explorationists, NAPE, in Lagos, said securing external funding arrangement was crucial to sustaining oil and gas production in Nigeria and ensuring the survival of Nigeria’s energy future.

NNPC

“Within the last three years, we have embarked on several successful Alternative Funding Programmes to sustain and increase the national daily production and producibility,” Baru said.

He explained that the $3.7billion financing package included the $1.2bn multi-year drilling financing package for  23 onshore and 13 offshore wells under NNPC/Chevron Nigeria Limited Joint Venture, termed Project Cheetah and the $2.5bn alternative funding arrangements for NNPC/SPDC JV ($1 billion) termed Project Santolina; NNPC/CNL JV ($780 million) termed Project Falcon as well as the NNPC/First E&P JV and Schlumberger Agreement ($700 million).

‘’Project Cheetah is expected to  increase crude oil production by 41,000bopd and 127Mmscfd with a government-take of $6 billion over the life of the project.

Similarly, Projects Santolina, Falcon and the  NNPC/First E&P JV and Schlumberger Funding Arrangement are expected to increase combined production of crude oil and condensate by 150,000 barrels per day, bpd and 618 million standard cubic feet, MMscfd of gas, with a combined government-take of about $32bn over the life of the Projects,’’ Baru said.

According to him, evolving a new funding mechanism for the JV operations is a critical part of President Muhammadu Buhari’s far-reaching reforms aimed at eliminating cash call regime, enhancing efficiency and guaranteeing growth in the nation’s oil and gas industry.

Explaining further, Dr. Baru noted that as a result of the cash call underfunding challenge which rose to about $1.2bn in 2016 alone,  NNPC and its JV partners began exploring alternative funding mechanisms that would allow the JV business finance itself in order to  sustain and grow the business.

He added that with average JV cash call requirement of about $600 million a month, coupled with flat low budget levels over the past years, the budgeted volumes were hardly delivered.

“The truth is that it is difficult to deliver the volumes without adequate funding. The low volumes and by extension low revenues had resulted in the underfunding of the Industry by Government, which has stymied production growth.

‘’Today, with the new Alternative Funding Arrangement in place, JVs will now relieve government of the cash call burden by sourcing for funds for their operations (estimated at $7-$9 billion annually),’’ he said.

Dr. Baru, who spoke on the theme: “Review of the Current State of Funding for the Upstream Sector and the need for a New Policy Initiative”, commended NAPE for its contributions towards shaping the oil and gas landscape in Nigeria.

He said it was incumbent on NNPC to associate with such a professional body for the benefit of the nation.

“It is on record that key pieces of legislation such as the Marginal Fields Act and the Deepwater Fiscal Policies, the Nigerian Content Act, as well as the Unitization Policy were all based on templates that came out of previous NAPE Conferences,” he said.

Speaking earlier, President of NAPE, Mr. Abiodun Adesanya, described the challenge of cash call as very critical because it affects all the objectives and targets of growing the reserves and increasing crude oil production in the country.