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Nigeria closes in on $88 million oil deal with CPDC, to rake in more from royalties and taxes
THE Nigerian National Petroleum Corporation (NNPC) sealed an oil deal worth $875.75 million with CMES-OMS Petroleum Development Company (CPDC), to provide alternative funding for its subsidiary firm the Nigerian Petroleum Development Company (NPDC), which operates Oil Mining Lease, OML 65.
This development was announced by NNPC’s spokesperson, Ndu Ughamadu on Sunday when the corporation finalised the contractual arrangements in Dubai, United Arab Emirates, ensuring CMES-OMS Petroleum Development Company would provide funding and technical services to the NPDC.
It is anticipated that the project would generate over $6.35 billion in taxes and royalties to Nigeria.
NNPC’s Chief Financial Officer, Umar Ajiya, also disclosed that the project’s scope cuts across exploration, development, production and provision of facilities with incremental first oil targeted at the fourth quarter of 2020.
Ajiya said the oil target had potential reserves of 800 million barrels of oil equivalent with a recoverable reserve of 244 million barrels of oil equivalent, mmboe, and cumulative production of 44mmboe from the Abura Main and Abura SE fields.
He described the contractor’s financing model as an innovative approach by the NPDC to funding its operations in response to the challenging economic environment to fast track development of the NPDCs underdeveloped assets.
The project is expected to ramp up production at OML 65 from 900 barrels per day to 60,000 barrels per day with average production over a field life at 40,000 barrels per day.
Speaking on the financing strategy, the CFO explained that the package required a comprehensive financing solution that would address the complex issues involved in growing the NPDC’s production.
He maintained that the expectation was that the collaboration between the NPDC and the 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 while maximizing value to all the stakeholders.
“The collaboration would enhance operational and financial performance strictly guided by the pre-agreed Key Performance Indicators which was critical for determining incentive payment due to the CPDC,” he said.