The Nigerian National Petroleum Corporation (NNPC) signed a Financing and Technical Services Agreement worth $3.15 billion between Sterling Oil Exploration and Energy Production Company Limited (SEEPCO) and the exploration and production arm of NNPC, the Nigerian Petroleum Development Company (NPDC), for the development of Oil Mining Lease (OML) 13.
The deal will help boost the nation’s crude oil reserves and daily oil production to 3 million barrels per day (bpd). The Group Managing Director of NNPC, Alhaji Mele Kyari, described the funding arrangement as a game-changer to oil and gas project financing in Nigeria.
He stated that the Federal Government is expected to earn over $10.2 billion in royalties and taxes from the project over the next 15 years, while NNPC would earn over $5 billion after payment of the entire financing obligation. Alhaji Kyari advised the management of NPDC to develop a strong community engagement strategy to forestall any crisis that could hinder operations. He also disclosed that the acreage had over 926 million stock tank barrels (MMSTB) and 5.24 trillion cubic feet (TCF) respectively of oil and gas reserves, adding that the Financing and Technical Services Agreement was for a period of 15 years while the $3.15 billion ceiling funding would be provided by SEEPCO with a ten year capital investment period and five years for cost recovery.
First oil of about 7,900bpd, is expected from the project by 1tApril 2020, while production is expected to peak at 94,000bpd and 542mmscfd within four years. On local content, the project is expected to enhance participation by indigenous companies in the industry by providing over 2,000 direct and indirect job opportunities. OML 13 is 100 percent owned by the NPDC and is located in the eastern axis of the Niger Delta covering a total area of 1987km².
NNPC has pledged to deliver on the gas pipeline bilateral agreement between Nigeria and Morocco in record time. The agreements include a Pipeline Cooperation Agreement (PCA) for the Nigeria-Morocco Gas Pipeline; an MoU to develop a chemical plant in Nigeria for production of ammonia and its derivatives and, thirdly, an agricultural cooperation agreement on vocational training and technical supervision.
The PCA will particularly facilitate the establishment of a gas pipeline to supply feedstock gas from Nigeria to Morocco, across the West African sub region and Europe. Additionally, NNPC has also indicated interest in working with the Indonesian national oil company, Pertamina, to improve on the volume of Nigeria’s crude oil export.
Chief of Staff to the President of Nigeria, Alhaji Kyari, stated that the partnership with Pertamina could open up more opportunities for the nation’s crude oil and gas in the face of the unpredictable global market. NNPC is ready to renew the trade contract with the Republic of Indonesia which expired in 2018 and directed the relevant arms of the corporation to work out modalities to ensure a better deal for the benefit of both countries.
On Tuesday 23 July, Gambia National Petroleum Corporation (GNPC) and British Petroleum Exploration (Gambia) Ltd (BP), signed a Joint Operating Agreement (JOA) for Block A1 License. This JOA marks the first involvement of the national oil company as a partner on an oil license in the history of The Gambia.
GNPC as government licensee has been assigned a ten percent participating interest in the license. The JOA defines the operational boundaries of the BP-GNPC relationship. The joint operating agreement was signed by GNPC managing director Yaya F. Barrow and BP Africa New Countries Vice President Jonathan Evans.
The JOA was reviewed and negotiated by a GNPC negotiation team with assistance from the Petroleum Negotiation Committee, Africa Legal Support facility, International Law Firm BCLP and Senghore Law Firm.
In partnership with GNPC, BP Exploration (Gambia) Ltd will start work in earnest to explore the potentials of offshore Block A1 in the search for oil in Gambian waters.
On Thursday 25 July, oil prices nudged higher amid Middle East tensions and after weekly U.S. crude stocks dropped more than expected, but gains were stemmed by a fragile demand outlook on increasing signs of slowing global economic growth.
The U.S West Texas Intermediate crude futures gained 84 cents to $56.72 a barrel by 7:54 AM ET (11:54 GMT), while Brent crude futures rose 21 cents to $63.39. The U.S. Energy Information Administration in its weekly report for Wednesday 24 July, showed a fall in crude stocks by 10.8 million barrels in the week ending July 19, despite expectations for a draw of 4 million barrels.
Oil prices jumped immediately following the release of the data, but gave back some of their gains after some analysts said the data could be potentially distorted due to impacts caused by Hurricane Barry.
The storm shut down more than half of the regular oil production on the U.S. Gulf of Mexico for at least two days before making its landfall on the central Louisiana coast on July 13. This is the sixth-straight weekly decline in domestic crude stockpiles amid signs of tightening supplies globally, as OPEC and its allies continue to cut production and sanctions on Iran and Venezuela squeeze output.
Against the tug of war between tightening supply and weaker demand in oil markets, rising Middle East tensions have also underpinned oil prices. But analysts appear reluctant to back a long-term bet on oil prices on the turmoil in the region. The overall sentiment in the oil market has darkened as investors worry that slowing global economic growth will weaken demand for oil.