NNPC Secures $700m to Achieve 40b barrels Oil Reserve Target

June 30, 2017

By Modupe Gbadeyanka

A funding support of about $700 million has been secured by Nigerian National Petroleum Corporation (NNPC) for the development of the Anyalu and Madu fields in the Niger Delta under Oil Mining Licence, OML 83 and OML 85, offshore Nigeria.

This is expected to help plans by the state-owned oil agency to grow the nation’s crude oil reserves to about 40 billion barrels by the year 2020.

On Thursday, in Abuja, the NNPC entered into a tripartite agreement with FIRST Exploration & Production Joint Venture as well as Schlumberger for oil fields.

Under the agreement, Schlumberger will provide the $700 million funding support that will help generate 193 million barrels of crude oil from the Anyala and Madu fields into the current reserves of 37.2 billion barrels and an additional 800 billion cubic feet of gas into the nation’s proven gas reserves which currently stand at 197 trillion cubic feet of gas.

In terms of daily production, the fields will yield 50,000 barrels of crude oil per day and 120 million standard cubic feet of gas per day by early 2019.

Speaking at the signing ceremony, Group Managing Director of the NNPC, Dr Maikanti Baru, said the innovative approach to funding JV operations in response to the challenging economic environment was novel and aligned wholly with the government’s aspiration to increase crude oil and gas production, reserves growth and monetization of the nation’s enormous gas resources.

He added that apart from serving as a test case for future funding mechanism, the approach adopted was in sync with the realization of the corporation’s 12 Business Focus Areas (BUFA) which is to ramp up crude oil production and reserves growth, amongst others.

He said the projected increase in production of gas would come in handy as the Corporation strived to sustain the supply of gas to the existing power plants as well as the planned power projects billed to come on board within the period.

Also, Managing Director and CEO of FIRST E&P, Mr Ademola Adeyemi-Bero, who signed on behalf of FIRST E&P, remarked that the partnership between the NNPC/FIRST E&P JV and Schlumberger would infuse a novel asset development model which combines FIRST E&P’s local knowledge and market position as an indigenous operating company, with Schlumberger’s financing and broad technical capabilities.

He added that the joint project team would strengthen FIRST E&P’s project delivery abilities and the model would offer the upstream subsector a credible alternative funding and technical partnership model for growing production and adding reserves.

On his part, Mr Patrick Schorn, Vice President, Schlumberger, who signed on behalf of Schlumberger traced the advent of the multi-national oil fields service company in Nigeria to the first commercial oil find in Oloibiri when Schlumberger played a role in Shell’s drilling effort.

He noted that the partnership with NNPC and FIRST E&P would provide Schlumberger the opportunity to leverage on its reservoir knowledge, oilfield services and project management expertise to lower development costs and maximize value for the partners.

The OMLs 83& 85 are located in shallow waters 40 km offshore in the Niger Delta, NNPC holds 60 percent interest in the licences while, FIRST E&P, the operator of the JV, holds the remaining 40 percent interest.

Apart from providing funding for the development of the fields, Schlumberger would also provide other Oilfield Services to the JV on a limited exclusive basis.

A joint project team would be established to drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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