The Nigerian National Petroleum Corporation and Chevron Nigeria Limited have executed the second and final phase of an alternative financing agreement expected to increase crude oil production in the country by about 39,000 barrels per day from the Sonam and Okan fields located in the OML 90 and 91 of the Niger Delta.

According to the corporation, the agreement, which was signed in London on Saturday, will also achieve an incremental peak production of about 283mmscfd of gas.

The Group Managing Director, NNPC, Dr. Maikanti Baru, who signed on behalf of the corporation, said the increment to be achieved by the agreement would spread over the remaining life of the assets until 2045.

He said the project was about 92 per cent completed and would cost about $1.7bn, with $780mn to be funded by a third-party, adding that it would produce natural gas liquids and condensate from the Sonam and Okan fields located in the OML 90 and 91 of the Niger Delta.

He stated that the project would also include the completion of the Sonam non-associated gas well platform and Sonam living quarters platform; drilling of seven wells in the Sonam field and the Okan 30E NAG well; as well as the completion of the 20-inch 32-kilometre Sonam pipeline and Okan pig receiver platform; and development of the associated facilities.

Baru was quoted in a statement issued on Sunday in Abuja by the spokesperson for the NNPC, Ndu Ughamadu, as saying, “The facilities are 100 per cent completed, while wells are 40 per cent executed.”

The corporation stated that in carrying out the project, the NNPC/CNL JV adopted a two-staged financing approach.

It said the stage one provided $400m, which was sourced from banks in Nigeria and achieved financial close on August 1, 2017, adding that the stage two was set to provide $380m from international commercial banks.

“Out of the $780m total financing for both stages, Chevron’s co-lending totals $312m, while the NNPC’s portion of the total facility stands at $468m,” the corporation stated.

Speaking further on the alternative financing approach, Baru explained that it was aimed at plugging the NNPC’s shortfall in funding JV cash call obligations, including settlement of pre-2016 cash call arrears.

The Managing Director, CNL, Jeff Ewing, said his company supported the Federal Government’s aspirations to sustain oil and gas production.

“We know the important role gas supply to the domestic market plays in growing power generation. We also understand government’s need to seek alternative sources to fund profitable and bankable JV projects,” Ewing stated.

He commended partners of the project for backing the third-party financing arrangement, which he said, would lessen cash call burden on the Federation Account.

He expressed Chevron’s commitment to execute the programme safely, timely and deliver its expected values for all stakeholders.

In August this year, two sets of alternative financing agreements on the JV projects were executed between the NNPC/CNL JV (Project Falcon) and the NNPC/SPDC JV (Project Santolina).

“Both are aimed at boosting reserves and production in line with parts of the Federal Government’s aspirations for the oil and gas industry,” the NNPC said.