The Nigerian National Petroleum Corporation (NNPC) and Chevron Nigeria Limited won the Thomson Reuters/PFI Magazine ‘Africa and Middle East Oil Deal of the Year Award for 2015.’ They were awarded for a joint venture embarked upon by both corporations in September of 2015. The deal, which was signed in London last year September, is worth $1.2billion dollars and will see the drilling of 36 offshore/onshore oil wells by its end. Nicknamed “Project Cheetah”, the deal marked a new outlook to the joint venture operations between NNPC and oil producers in Nigeria. This recognition by its peers will also go a long way in encouraging NNPC’s new boss, Dr. Ibe Kachikwu.
Here are some of the features of Project Cheetah:
Payment plans
The deal is being financed by both Nigerian and International lenders, including Standard Chartered Bank and United Bank for Africa. It is also part of the Accelerated Upstream Financing Programme, a programme started by the NNPC to enable the Federal Government pay its Joint Venture partners in the oil sector. These partners, along with Chevron include Shell Petroleum Company, Mobil Producing Nigeria Unlimited, Nigerian Agip Oil Company, Elf Petroleum Nigeria Limited and Texaco Overseas Petroleum Company of Nigeria Unlimited.
Stages of the Venture
The Venture, which is divided into 2 stages, will run for 3 years (2015-2018). The first stage which started last year will end this year, and 19 oil wells will be drilled in this period. These wells are estimated to yield 21,000 barrels of crude oil and 120 million standard cubic feet of gas per day. The second stage of the venture (2017-2018), comprising of 17 wells, will produce about 20,000 barrels of crude oil and 7 million standard cubic feet of gas per day. Both stages are expected to bring in about $5 billion into the Federal Government’s reserves and also increase gas supply to Nigeria’s power stations, adding another 400 megawatts to its power supply.
Semi-Autonomy for NNPC
This deal also represents the first venture under the Accelerated Upstream Financing Programme, and is owned on a 60-40 basis by the NNPC and Chevron respectively. It is also the first kind of semi-autonomous programme which represents alternative funding for the NNPC, outside of the government.
The future
These newly drilled wells are set to increase the oil production and gradually replace Nigeria’s old oil wells. This model of financing, which is the basis for which NNPC received the award, may be used as a model for its peers in Middle eastern countries and other African countries.
