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Nigeria to earn fresh $6.35bn in taxes, royalties from OML 65 expansion

First from left: NNPC CFO, Mr. Umar Ajiya at the signing ceremony in Dubai.
First from left: NNPC CFO, Mr. Umar Ajiya at the signing ceremony in Dubai.

The push by the management of the Nigerian National Petroleum Corporation (NNPC) to increase crude oil production and grow the nation’s revenue profile gained momentum with the closure of $875.75m alternative financing deal for the Nigerian Petroleum Development Company (NPDC) operated OML 65 through the Funding and Technical Services Agreement with CMES-OMS Petroleum Development Company (CPDC).

A statement by NNPC’s spokesman, Ndu Ughamadu, quoted the NNPC Chief Financial Officer, Mr. Umar Ajiya, to have said that the project, which scope cuts across exploration, development, production and provision of facilities with incremental first oil targeted for Q4 2020, was estimated to have potential reserves of 800 million barrels of oil equivalent (mmboe) with an ultimate recoverable reserve of 244 mmboe and cumulative production of 44mmboe from the Abura Main and Abura SE fields.

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Mr. Ajiya explained that over the project’s life, it was expected to generate over $6.35bn in taxes and royalties to the federation to support government’s medium to long term economic development agenda.

Speaking at the closing meeting with the financing partners in Dubai, United Arab Emirates, Mr. Ajiya, described the contractor financing model as an innovative approach by NPDC to funding its operations in response to the challenging economic environment, saying the approach would fast-track the development of NPDCs under-developed assets.

He said that the project was expected to ramp up production at OML 65 from 900barrels per day to 60, 000 barrels per day with average production over field life at 40,000 barrels per day.

Throwing more light on the financing strategy, the CFO explained that the package entailed comprehensive financing solution that addresses the complex issues involved in growing NPDC’s production, minimizes its cost of capital, and maximizes its value preservation.

He said the expectation was that this collaboration between NPDC and CPDC would translate in real terms to the efficient execution of the scope of activities for the optimal development of the OML 65 Asset within cost and schedule, whilst maximizing value to all the stakeholders.

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