NNPC and JV partners to raise $ 1.7 bn in alternate fund

The Nigerian National Petroleum Corporation (NNPC) and its Joint Venture partners are set to raise $ 1.7 bn being the shortfall of this year's total funding requirement for upstream oil and gas projects put at $ 9 bn.
For joint venture operations this year, the Federal Government is providing $ 4.2 bn as cash call to cover its 57 % equity interest in the six joint ventures. The multinational oil partners are putting down $ 3.1 bn to cover their total 43 % equity. They will also provide funding for projects being executed under Production Sharing Contract (PSC) agreements.

NNPC and its partners namely Shell Petroleum Development Company, Chevron Nigeria, Mobil Producing Nigeria, Elf Petroleum Nigeria, Agip and Texaco, had last year, raised $ 600 mm to meet the shortfall in the funding after the Federal Government provided only $ 3.2 bn.
The Federal Government, had already set a benchmark for all alternative funding schemes to be entered into by the NNPC and its partners, using the model adopted in raising $ 1.275 bn loan for the Natural Gas Liquids (NGL) phase two project by the NNPC/Mobil Producing Nigeria joint venture.

The project provided a soft lending terms including 6 % interest rate. NNPC Group Managing Director, Engineer Funsho Kupolokun said the increasing tempo of upstream activities had pushed the industry spending to an average $ 9 bn. Kupolokun said the increase in oil and gas exploration and production in the country was necessary to meet the Federal Government's set target of raising crude oil reserves to 40 bn barrels by 2010 from the current level of 35 bn and production capacity to 4.5 mm bpd.
"Nigeria's average daily production of crude oil is over 2.0 mm bpd, with current producibility of 3.0 mm bpd. With the spate of high profile projects currently being developed, the 2010 target production is achievable," said the NNPC CEO.

He listed fields from where the country's production would be increased significantly to include Bonga, Ngolo, Apo, Agbami, Erha, Akpo and Usan among others. There is also the gas sector, where according to Kupolokun, the aspiration is to end flaring by the year 2008, capture economic value and generate as much revenue as oil by 2010.
"Efforts are on-going to grow the domestic gas demand from the current 600 mm cfpd to 1,700 mm cfpd by the year 2010, while the export volumes will exceed 8,000 mm cfpd by the same period," he said.

Meanwhile, US oil major, ChevronTexaco said that it had lost assets worth $ 500 mm (N 66.5 bn) to the crises in the Niger Delta. The General Manager, Public and Government Affairs, of Chevron Nigeria Limited, Mr Femi Odumabo, told that the continued closure of its swamp oil facilities, which led to the loss of 140,000 bpd of crude production, apart from the huge financial losses, also resulted in drastic reduction in budget approved for it by the Nigerian government.
"Because of the crisis since 2003, we lost 140,000 bpd of production, our revenue has gone down and budget reduced," said Odumabo.

About 500 youths from Ugborodo community in Delta State had stormed the Escravos Oil Export Terminal, operated by Chevron, setting off fresh clashes with security agencies.
The community was said to be protesting the non implementation of a Memorandum of Understanding (MoU) signed in 2002 with the oil firm, bordering on provision of more jobs and infrastructure.