Nigeria to earn $5.60bn in taxes, Schlumberger $724m oil finance deal — Baru

The Nigerian National Petroleum Corporation (NNPC), has said the
NNPC, First E&P and Schlumberger 724 million dollars oil financing deal
will enable Nigeria earn 5.60 billion dollars in taxes and royalty.

A statement by NNPC’s Spokesperson, Mr Ndu Ughamadu in Abuja on
Sunday said that Dr Maikanti Baru,,Group Managing Director of NNPC, said this
at the final signing of the deal in London.

Baru said the package would also provide 1.32 bilion dollars in
net cash flows after Schlumberger’s cost recovery and compensation in line with
the terms of the agreement.

NNPC had in 2017 signed the tripartite term sheet for the
financing and technical services arrangement between NNPC/FIRST E&P JV and
Schlumberger for the Anyalu and Madu fields under Oil Mining Licence, OML 83
and OML 85, offshore Nigeria.

Under the agreement, global oil services giant, Schlumberger
will provide 724.14 million dollars out of the required project cost of 1.082 billion
dollars.

The balance of 358.79 million dollars will be funded with cash
flows generated by the project.

The Anyala and Madu fields are projected to have 193 million
barrels of crude oil and 0.637 trillion cubic feet of proven gas reserves with
production plateau of 50, 000 barrels of oil per day and 120 million standard
cubic feet of gas per day.

The OMLs 83 and 85 are in shallow waters 40kms  off shore
in the Niger Delta.

NNPC holds 60 per cent interest in the licences while, FIRST
E&P, the operator of the JV, holds the remaining 40 per cent 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 drive technology transfer while
leveraging on the global technical expertise of Schlumberger and the extensive
local knowledge of the JV partners.

Baru, said in arriving at the innovative alternative funding
package, the corporation was guided by the need to instill transparent and
accountable processes.

“NNPC also followed strict compliance with all extant laws,
regulations and established governance protocols and overriding national
interest and drive to achieve competitive market pricing for such a greenfield
project.“

He explained that NNPC, FIRST E&P Joint Venture (JV) project
financing formula came as a creative approach to funding JV operations in
response to the realities of the prevailing operating environment.

“Apart from aligning wholly with government’s aspiration of
increased crude oil and gas production, reserves growth and monetisation of the
nation’s enormous gas resources.

He said the model was in tandem with one of the corporation’s 12
Business Focus Areas (BUFAs).

Baru said the model also comprises ramping up crude oil, gas
reserves and production which also supports government’s 7 Big Wins
aspirations.

He said the Schlumberger financing package covers pre-Final
Investment Decision (FID) funding, 100 per cent of capital expenditure for
three years and pre-production operating expenses.