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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.

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Economy

Nigeria Allotted $3.35bn From IMF’s Special Drawing Rights(SDRs)

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Nigeria has secured about $3.35 billion as part of a historic general allocation of Special Drawing Rights (SDRs) of the International Monetary Fund (IMF).

This is part of the general allocation of about SDR456 billion – an equivalent of $650 billion – by the IMF Board of Governors.

This will help to boost liquidity in Nigeria that is currently battling declining revenue.

The allocation which was approved on Monday aims to boost global liquidity at a time when the world is grappling with the coronavirus (COVID-19) pandemic.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis,” said IMF Managing Director, Kristalina Georgieva.

Although it is not a currency, the SDR is an international reserve asset created by the IMF to supplement the official reserves of its member countries.

It is a potential claim on the freely usable currencies of IMF members and can provide a country with liquidity. The SDR is defined by the US dollar, Euro, Chinese Yuan, Japanese Yen, and the British Pound.

The amount allocated to Nigeria is as a result of the exchange rate of reference which is 0.702283 SDR to a dollar as of July 1, 2021, and Nigeria has 2.4545 billion SDRs.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy,” the IMF managing director added.

“It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

According to the IMF, the general allocation of SDRs will become effective on August 23 and the newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

It stated that about $275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

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UN Chief Welcomes Historic’ IMF Liquidity Boost for Governments in Need

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As the COVID-19 crisis continues to exacerbate restrictions on government spending throughout the world, the UN chief on Tuesday welcomed the decision by the International Monetary Fund (IMF) to approve a $650 billion allocation of Special Drawing Rights to “boost liquidity”.

Secretary-General António Guterres issued a statement on the policy change towards Special Drawing Rights or SDRs, a type of foreign reserve asset that is IMF defined and maintained, as additional funding that could help to pay down debts.

He also underscored that economies not in need of access to cash should “consider channeling these resources to vulnerable low and middle-income countries that need a liquidity injection by replenishing the IMF’s Poverty Reduction and Growth Trust Fund”.

‘Historic decision’

Yesterday’s IMF’s allocation makes new borrowing available to the fund’s 190 member countries, roughly in proportion to their share of the global economy.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis”, said IMF Managing Director Kristalina Georgieva.

“The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis.”

Halting debt default

The Secretary-General stressed that it is also “critical to quickly establish the proposed Resilience and Sustainability Trust at the IMF…[for] a comprehensive response and recovery, including providing more support for vaccinations and debt management and to support the efforts of developing economies in restructuring for inclusive growth”.

Last month, he urged the world’s largest economies to spearhead a global COVID-19 vaccination plan and expand debt relief to developing countries battered by the pandemic.

Bulwark against default

He also advised supporting a new $50 billion IMF investment roadmap aimed at ending the pandemic and driving a fast recovery.

As many developing countries are “teetering on the verge of debt default”, the UN chief encouraged the G20 leading industrialized nations to channel unused SDRs to the Fund’s new resilience and sustainability plan, for these nations.

“Special Drawing Rights also need to be considered as additional funding, not deducted from Official Development Assistance”, he reminded.

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IMF Approves Largest SDR Allocation In History to Boost Global Liquidity

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The Board of Governors of the International Monetary Fund (IMF) has approved a general allocation of Special Drawing Rights (SDRs) equivalent to US$650 billion (about SDR 456 billion) on August 2, 2021, to boost global liquidity.

“This is a historic decision – the largest SDR allocation in the history of the IMF and a shot in the arm for the global economy at a time of unprecedented crisis. The SDR allocation will benefit all members, address the long-term global need for reserves, build confidence, and foster the resilience and stability of the global economy. It will particularly help our most vulnerable countries struggling to cope with the impact of the COVID-19 crisis,” IMF Managing Director Kristalina Georgieva said.

The general allocation of SDRs will become effective on August 23, 2021. The newly created SDRs will be credited to IMF member countries in proportion to their existing quotas in the Fund.

According to the IMF, about US$275 billion (about SDR 193 billion) of the new allocation will go to emerging markets and developing countries, including low-income countries.

“We will also continue to engage actively with our membership to identify viable options for voluntary channeling of SDRs from wealthier to poorer and more vulnerable member countries to support their pandemic recovery and achieve resilient and sustainable growth”, Ms. Georgieva said.

One key option is for members that have strong external positions to voluntarily channel part of their SDRs to scale up lending for low-income countries through the IMF’s Poverty Reduction and Growth Trust (PRGT). Concessional support through the PRGT is currently interest-free.

The IMF is also exploring other options to help poorer and more vulnerable countries in their recovery efforts. A new Resilience and Sustainability Trust could be considered to facilitate more resilient and sustainable growth in the medium term.

In April last year, Nigeria collected $3.4 billion—equivalent to 100 percent of its quota— under the IMF’s Rapid Financing Instrument, RFI, to tackle the funding gaps created by COVID-19, especially when the crude oil market stagnated.

The financial support, approved by the IMF Executive Board on April 28, 2020, provided critical support to shore up Nigeria’s healthcare sector and shielded jobs and businesses from the shock of the COVID-19 crisis while helping to limit the decline in the nation’s external reserves.

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