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NPDC Seeks N967bn to Develop 416 Million Barrels of Oil

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  • NPDC Seeks N967bn to Develop 416 Million Barrels of Oil

The flagship subsidiary of the Nigerian National Petroleum Corporation, the Nigerian Petroleum Development Company, is interfacing with third-party financiers to raise $3.15bn (N967.1bn at the official exchange rate of N307 to a dollar) to develop Nigeria’s crude reserves and increase oil and gas production from Oil Mining Lease 13.

It was gathered that the fund would enable the NPDC to develop 416 million barrels of oil reserves and increase production by 94,000 barrels of oil per day.

Although the name of the financiers could not be ascertained as of the time of filing this report, documents obtained by our correspondent from the NNPC in Abuja also showed that the NPDC would use the fund to develop 542 million standard cubic feet per day of natural gas from the same OML 13.

The NPDC, which is an upstream subsidiary of the NNPC, was established in 1988 to engage in the business of oil and gas exploration and production.

Officials at the firm said the NPDC’s target was to increase its oil and gas production to 500,000bopd and 1.5 billion standard cubic feet per day by 2020.

They further stated that the NPDC’s production increased from a constrained 15,000 barrels of crude oil per day to 240,000bopd due to the return of the Forcados Oil Terminal.

In late 2017, NPDC’s Managing Director, Yusuf Matashi, said the firm was poised to grow its equity production from the 180,000bopd to 300,000bopd by 2018, adding that production was also projected to hit 400,000bopd and 500,000bopd by 2019 and 2020 respectively.

The Minister of State for Petroleum Resources, Ibe Kachikwu, and the Group Managing Director, NNPC, Maikanti Baru, at various occasions, had stated that the Federal Government was intensifying efforts to boost the country’s crude oil reserves.

The latest data obtained from the corporation in Abuja on Friday, as contained in a document on the achievements of the current management of the NNPC between 2016 and 2018, stated that the target of the national oil firm was to increase Nigeria’s crude oil reserves from 37 billion barrels to 40 billion barrels by 2020.

Officials at the Federal Ministry of Petroleum Resources and the NNPC said the move to raise $3.15bn from third-party financiers to develop oil reserves from OML 13 was part of the government’s target of increasing Nigeria’s total crude oil reserves.

In the document, the corporation stated that the ownership of OML 13 had been restored to the NNPC via a presidential intervention.

OML 13 is an onshore oil block on the eastern Niger Delta with an acreage of 1,923 square meters. It plays host to the Utapate South and Ibibio fields, as well as some producing marginal fields.

“NPDC is raising $3.15bn through third-party financing with Technical Service Agreement to develop 416MMbbls of oil reserves and increase production by 94kbopd and 542mmscfd of natural gas from OML 13,” the NNPC stated in the document.

It further noted that OMLs 65 and 111 financing and TSAs were being negotiated.

Matashi had stated that the NPDC was the fifth largest exploration and production oil producer in Nigeria and that the company was ready to efficiently manage its portfolio of assets to achieve its yearly production targets.

Outlining some of the portfolio of the oil firm, he said, “NPDC has 55 per cent equity in eight blocks: Oil Mining Leases 4, 26, 30, 34, 38, 40, 41 and 42; non-equity operations in four blocks of selected NNPC Joint Venture fields (OMLs 11, 20, 49 & 51).

“NPDC has 60 per cent participatory interest in four blocks (OMLs 60, 61, 62 and 63) and 100 per cent ownership of six blocks (OMLs 13, 64, 65, 66, 111 and 119). In a nutshell, the company is involved in 29 concessions, which comprise 22 Oil Mining Leases and seven Oil Prospecting Leases.”

In the latest document from the NNPC, the corporation stated that the NPDC currently supplied an average of 720mmscfd, representing about 47 per cent of total gas supply to the domestic market.

The corporation added that gas supply to industries had also witnessed an increase, as the average daily supply to operators in the industrial sector had increased to 450mmscfd.

The NNPC further explained that the national crude reserves were increased to 37.2 billion barrels at the end of 2017, adding that this was due to the discovery of the Owowo field in deepwater OML 139 with an estimated one billion barrels of crude reserves.

On further measures adopted to boost crude production, the corporation said it raised $1.2bn for NNPC/CNL Project Cheetah and stated that the financing for the project was oversubscribed.

The NNPC stated that in 2017 alone, it signed about $2.5bn alternative funding arrangements, notably NNPC/SPDC Joint Venture worth $1bn and known as Project Santolina; NNPC/CNL JV valued at $780m – Project Falcon; and NNPC/First E&P JV and Schlumberger valued at $700m.

“These three 2017 funding arrangements are expected to increase combined production of crude oil and condensate by 150,000bopd and 618mmscfd of gas with a combined government take of about $32bn over the life of the projects,” it added.

The oil firm also stated that it had been able to lower the unit cost of production of crude for upstream companies from $27 per barrel to $22 per barrel.

It added that crude oil production level was sustained above an average of two million bpd in 2018 and that this was an improvement over the 1.8 million bpd and 1.86 million bpd recorded in 2016 and 2017 respectively.

It, however, stated that the corporation’s plan was to attain 2.5 million bpd national production and increase to three million bpd by 2020.

To further add to the country’s crude reserves, the NNPC said it would sustain exploration in Chad Basin and Benue Trough.

It also noted that over the course of the three-year period, the security in the Niger Delta improved largely due to constructive engagements and dialogue with all relevant stakeholders.

“This has, in no small measure, boosted our production. We thank all our stakeholders and reaffirm our commitment to continuous engagement with them,” the oil firm said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Economy

Electricity Consumers Get 611,231 Meters Under MAP Scheme

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Electricity Consumers Get 611,231 Meters Under MAP Scheme

A total of 611,231 meters have been deployed as at January 31, 2021 under the Meter Asset Provider initiative since its full operation despite the COVID-19 pandemic and other extraneous factors, the Nigerian Electricity Regulatory Commission has said.

NERC disclosed this in a consultation paper on the review of the MAP Regulations.

The proposed review of the MAP scheme is coming nearly four months after the Federal Government launched a new initiative called National Mass Metering Programme aimed at distributing six million meters to consumers free of charge.

“The existence of a huge metering gap and the need to ensure successful implementation of the MYTO 2020 Service-Based Tariff resulted in the approval of the NMMP, a policy of the Federal Government anchored on the provision of long-term low interest financing to the Discos,” NERC said.

The commission had in March 2018 approved the MAP Regulations with the aim of fast-tracking the closure of the metering gap in the sector through the engagement of third-party investors (called meter asset providers) for the financing, procurement, supply, installation and maintenance of meters.

It set a target of providing meters to all customers within three years, and directed the Discos and the approved MAPs to commence the rollout of meters not later than May 1, 2019.

But in February 2020, NERC said several constraints, including changes in fiscal policy and the limited availability of long-term funding, had led to limited success in meter rollout.

NERC, in the consultation paper, highlighted three proposed options for metering implementation going forward.

The first option is to allow the implementation of both the NMMP and MAP metering frameworks to run concurrently; the second is to continue with the current MAP framework with meters procured under the NMMP supplied only through MAPs (by being off-takers from the local manufacturers/assemblers).

The third option is to wind down the MAP framework and allow the Discos to procure meters directly from local manufacturers/assemblers (or as procured by the World Bank), and enter into new contracts for the installation and maintenance of such meters.

“Customers who choose not to wait to receive meters based on the deployment schedule of the NMMP shall continue to have the option of making upfront payments for meters which will be installed within a maximum period of 10 working days,” NERC said.

The regulator said such customers would be refunded by the Discos through energy credits, adding that there would be no option for meter acquisition through the payment of a monthly meter service charge.

“Where meters have already been deployed under the meter service charge option, Discos shall make one-off repayment to affected customers and associated MAPs. Such meters shall be recognised in the rate base of the Discos,” it added.

NERC urged stakeholders to provide comments, objections, and representations on the proposed amendments within 21 days of the publication of the consultation paper.

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Economy

Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

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Nigeria’s Economy Moving in Right Direction but Slow – Amina Mohammed

Nigeria is moving in the right direction economically but its movement is not fast, the United Nations stated on Thursday.

Deputy Secretary-General of the United Nations, Amina Mohammed, said this during a meeting at the headquarters of the Federal Ministry of Industry, Trade and Investment in Abuja.

She said the challenges in Nigeria were huge, its population large but described the country’s economy as great with lots of opportunities.

The UN scribe stated that after traveling by train and through various roads in the Northern parts of Nigeria, she discovered that the roads were motorable, although there were ongoing repairs on some of them.

Mohammed said, “This is a country that is diverse in nature, ethnicity, religious backgrounds and opportunities. But these are its strengths, not weaknesses.

“And I think the narrative for Nigeria has to change to one that is very much the reality.”

Speaking on her trips across parts of Nigeria, she said, “What I saw along the way is really a country that is growing, that is moving in the right direction economically. Is it fast enough? No. Is it in the right direction? Yes it is.

“And the challenges still remain with security, our social cohesion and social contract between government and the people. But I know that people are working on these issues.”

She said the UN recognised the reforms in Nigeria and other nations, adding that the common global agenda was the Sustainable Development Goals.

Mohammad commended Nigeria’s quick response to the COVID-19 pandemic, as she expressed hope that the arrival of vaccines would be the beginning of the end of COVID-19.

On his part, the Minister of Industry, Trade and Investment, Adeniyi Adebayo, told his guest that the Federal Government was working hard to make Nigeria the entrepreneurial hub of Africa.

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Economy

N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

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N10.7tn Spent on Fuel Subsidy in 10 Years – MOMAN

Nigeria spent a total of N10.7tn on fuel subsidy in the last 10 years, the Chairman, Major Oil Marketers Association of Nigeria, Mr Adetunji Oyebanji, has said.

Oyebanji, who was the guest speaker at the 18th Aret Adams Lecture on Thursday, said N750bn was spent on subsidy in 2019.

He highlighted the need for a transition to a market-driven environment through policy-backed legislative and commercial frameworks, enabling the sustainability of the downstream petroleum sector.

“Total deregulation is more than just the removal of price subsidies; it is aimed at improving business operations, increasing the investments in the oil and gas sector value chain, resulting in the growth in the nation’s downstream petroleum sector as a whole,” he said.

The managing director of 11 Plc (formerly Mobil Oil Nigeria Plc) said steps had been taken, “but larger and faster leaps are now required.”

According to him, deregulation requires the creation of a competitive market environment, and will guarantee the supply of products at commercial and market prices.

“It requires unrestricted and profitable investments in infrastructure, earning reasonable returns to investors. It requires a strong regulator to enable transparency and fair competition among players, and not to regulate prices,” Oyebanji said.

He noted that MOMAN had recently called for a national debate by stakeholders to share pragmatic and realistic initiatives to ease the impact of the subsidy removal on society – especially on the most vulnerable.

He said, “A shift from crude oil production to crude oil full value realisation through deliberate investment in domestic refining and refined products distribution, creates the opportunity to transform the dynamics of the downstream sector from one of ‘net importer’ to one of ‘net exporter’, spurring the growth of the Nigerian economy.

“Effective reforms and regulations are key drivers for the growth within the refining sector. Non-functional refineries cost Nigeria over $13bn in 2019. If the NNPC refineries were operating at optimal capacity, Nigeria would have imported only 40 per cent of what it consumed in 2019.”

Full deregulation of the downstream sector remains the most glaring boost to potential investors in this space, according to Oyebanji.

He said, “As crude oil prices will fluctuate depending on the prevailing exchange rates, it will be astute to trade in naira to avoid inevitable price swings.

“There needs to be a balance between ensuring the sustainable growth of the crude oil value chain (upstream through downstream) and providing value for the Nigerian consumer and the Nigerian economy.”

He said the philosophy should be for the government to put the legislative and commercial framework in place and let the market develop by itself.

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