July 9, 2024

Oil-backed loans needed to finance drilling, other operations — NNPC

Crude oil theft: Illegal connections hit 4,800— Mele Kyari 

Group Managing Director, NNPC, Mele Kyari

By Udeme Akpan, Energy Editor

The Nigerian National Petroleum Corporation, NNPC, Ltd. has said oil-backed loans would enable the company finance many capital projects, including drilling operations.

The activities would culminate in increasing Nigeria’s oil and gas reserves and production capacity, currently standing at 37 billion barrels and more than 206 trillion standard cubic feet of gas, respectively.

The company said at the right time announcements would be made by financial advisers and arrangers.

Read Also: NNPC seeks $2bn oil-backed loan to finance operations

Vanguard reported that NNPC had commenced moves to secure about $2 billion oil-backed loan to finance its operations.

NNPC reacts

In an email response to Vanguard, Chief Corporate Communications Officer, NNPC Ltd, Olufemi Soneye, said: “When we are ready to proceed with any of the initiatives mentioned, we will make an official announcement.

“As a global energy company, we need funding to undertake aggressive drilling campaigns. Naturally, we will require financing for our high capital expenditure projects.

“Our financing arrangements are typically announced through our financial advisers and arrangers. When the time comes, new financing transactions will be announced to the market.”

Reuters had reported that “Nigeria’s NNPC is in talks for another oil-backed loan to boost its finances and allow investment in its business. Its chief executive told Reuters, as pressure mounts on the state-backed oil company the economy depends upon.

“The Nigerian National Petroleum Corporation (NNPC), in which the government is the main stakeholder, aims to raise at least $2 billion, two sources familiar with the situation said.

“Nigeria’s government finances rely on the oil the NNPC exports. And oil provides the bulk of crucial foreign exchange reserves. But pipeline theft and years of underinvestment have sapped oil production in recent years, and the cost of gasoline subsidies has further depleted cash reserves.”

Mele Kyari speaks

Reuters also quoted NNPC chief, Mele Kyari, as stating that NNPC wanted a loan against 30,000-35,000 /bpd of crude.

However, he declined to say how much money it sought.

He also said: “The cash raised would be used for all of the NNPC’s business activities, including supporting production growth.

“We have no problem covering our gasoline payments. This is just money for normal business and not a desperate act.”

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