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Baru Outlines Over $8bn Ongoing NNPC Financing Deals

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  • Baru Outlines Over $8bn Ongoing NNPC Financing Deals

The Group Managing Director of the Nigerian National Petroleum Corporation, Maikanti Baru, on Tuesday, reeled out the over $8bn worth of deals currently being handled and pursued by the NNPC since the beginning of 2019, as he faces retirement in a couple of days.

Baru is due for retirement on July 7 this year, as he would have attained the mandatory civil service retirement age of 60.

The NNPC boss, who delivered the keynote address at the official opening of the 2019 Nigeria Oil and Gas conference in Abuja, stated that the oil firm was involved in financing deals and had signed Memorandum of Understanding worth several billions of dollars since 2019.

He said, “This year, we have significantly progressed new third- party financings for the NNPC/SPDC JV (Shell Petroleum Development Company Joint Venture) and NNPC/MPNU JV (Mobil Producing Nigeria Unlimited). Both transactions were substantially over-subscribed.

“NNPC/SPDC Santolina III Project has an estimated cost of circa $500m and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3bn (NNPC to raise circa $700m in third-party financing).”

Baru added, “Furthermore, we have initiated third-party financing for the NNPC/NAOC (Nigeria Agip Oil Company) Okpai II Independent Power Plant project, with estimated cost of circa $658.42m and the NNPC/TEPNG (Total Exploration and Production Nigeria) Ikike development project, with estimated cost of circa $473.4m to be funded through prepayment for gas by NLNG. The price balance is to flow to the Federation Account.”

He said the corporation had successfully initiated the Memorandum of Understanding (framework agreement) between NNPC and the Nigeria Liquified Natural Gas company for the provision of about $2.5bn funding for NNPC’s portion of cash call payable on upstream gas supply projects for SPDC, TEPNG and NAOC JVs.

Baru added that the NNPC had also initiated negotiations for the Financing and Technical Services Agreements for identified Nigeria Petroleum Development Company assets – OMLs 13, 65 and 111.

He said, “As you may be aware, NPDC currently contributes about eight per cent of current national daily production. Further developments from these assets and NPDC JV assets are expected to move NPDC to over 300 barrels per day equity.

“We have progressed negotiations with EPC contractors and potential Chinese lenders on the third-party financing for the Ajaokuta-Kaduna-Kano Gas Pipeline Project of $2.89bn.”

He noted that the NNPC had also been active in the frontier basins as exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River-2 well in the Benue Trough.

Baru stated that between 2015 and 2017, the corporation was involved in various project financings of over $3bn in new investment capital.

He said, “These include the $1.2bn multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49; 90 and 95 under the NNPC/Chevron JV, termed, Project Cheetah; NNPC/SPDC JV ($1bn) – Project Santolina; NNPC/CNL JV ($780m) – Project Falcon; NNPC/First E and P JV; and Schlumberger ($700m).”

The NNPC boss, however, noted that promoting investment required stability in the regulatory framework, clarity in terms of fiscal direction and reforms, access to capital and more importantly, effective and efficient deployment of both capital and human resources.

He also told participants at the conference that Nigeria held about 2.2 per cent of global oil reserves.

Baru explained that the country’s crude oil reserves had grown steadily from about 22 billion barrels in 1999 to 37.5 billion barrels in 2018.

“Nigeria is home to the second largest crude oil reserves in Africa after Libya. Our crude oil production currently hovers around 2.2-2.3 million bocpd. This was bolstered by the coming onstream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd,” he stated.

On the gas side, he said Nigeria had the 9th largest gas reserves in the world with gas reserves of 201 trillion cubic feet and upside potential of about of 600Tcf.

He added, “It is also significant to state that out of about $194bn surge in the capital expenditure coming into upcoming oil and gas developments on the African continent from 2018 to 2025, Nigeria today accounts for $48.04bn (over 24.8 per cent) with other African countries sharing the rest.”

Baru stated that to encourage the existing players in the industry, particularly the traditional JV partners, NNPC undertook to settle all outstanding cash call arrears amounting to $5bn in 2015.

“Till date, we have defrayed over $2bn. All these efforts are geared towards sustaining investment and renewing investor confidence,” he said.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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