Nigeria to attract N17.29tn oil investment in Africa by 2025 — Baru

Dr Maikanti Baru, the Group Managing Director, NNPC, disclosed this while addressing the 2019 Nigerian Oil and Gas Conference and Exhibition (NOG) in Abuja on Tuesday.

The theme is “ Promoting Investment and Collaboration in Nigeria’s Oil and Gas Industry.”

Baru said currently, Nigeria is a leading Oil and Gas producer in Africa.

“The nation’s energy outlook appears very positive even amidst the difficult operating and economic headwinds across the continent.

“It is also significant to state that out of about 194 billion dollars surge in the capital expenditure coming into upcoming oil and gas development on the African continent from 2018 to 2025, Nigeria today account for 48.04 billion dollars (over 24.8%) with other African countries sharing the rest.

“For Nigeria, therefore, oil and gas remain essential building blocks for our economic growth, particularly as a developing country.

“There is, therefore, no gain saying the fact from the Upstream, Midstream and Downstream sub-sectors, the Nigerian Oil and Gas Industry is replete with massive investment opportunities.

“To encourage the existing players in the Industry particularly the traditional JV partners, NNPC undertook to settle all outstanding cash call arrears amounting to five billion dollars in 2015.

“Till date, we have defrayed over 2 billion dollars. All these efforts are geared towards sustaining investment and renewing investor confidence,’’ he said.

Baru thanked the organisers, the CWC Group, for their steadfastness in the development of the industry.

He equally pay tribute to the late Dr Rilwanu Lukman and Dr Alirio Parra, founders of the CWC Group, for their leadership and clairvoyance.

“This year’s NOG offers yet another opportunity for industry players and stakeholders alike to rally and seek workable solutions to issues that confront and challenge the seamless operation of the sector as we seek to expand our footprints and take our beloved industry to the next level.

“Like many of you know, I will be retiring officially from the Corporation on 7th July, 2019, by then I would have attained the statutory 60 years retirement age.

“I am therefore super-excited today for the great opportunity afforded me by this year’s edition of the NOG for two reasons.

“The first reason is that it falls perfectly on my twilight days at the NNPC, which interestingly means I have that lifetime chance to say goodbye to many of you whom I have known and interacted with for close to three decades of my career at the corporation,” Baru said.

He said that Nigeria holds about 2.2 per cent of global oil reserves while Nigeria crude oil reserves have grown steadily from about 22 billion barrels in 1999 to 37.5billion barrels in 2018.

NNPC boss said that Nigeria is the second largest crude oil reserves in Africa after Libya, while Nigeria crude oil production currently hovers around 2.2 -2.3 million bocpd.

He said that this was bolstered by the coming onstream of the Egina Field in December 2018 and which has currently ramped up to 200,000bopd.

“On the gas side, we have the 9th largest gas reserves in the World with a 2P gas reserves of 201Trillion cubic feet (Tcf) and an upside potential of about of 600Tcf.

“In terms of gas production and utilization, Nigeria averages about 8.4bscfd. While only 18 per cent of the production is consumed in the domestic market (Power, Industries and WAGP).

“43 per cent is exported as LNG, 32 per cent is re-injected for enhanced oil recovery and other operational uses like fuel gas while 7% of total gas production is currently being flared,” he said.

Baru said in the last three years, the corporation had been very active in the capital market assessing financing for different projects.

He said: “These projects have sustained the Industry momentum; we have also used them as levers to promote collaboration.

“Over the past years, through systematic process, we have incrementally opened new areas to indigenous players. For some, it has provided the opportunity to collaborate with international or established Industry players.

“We have created a platform in the oil and gas sector to explore a vast range of investment opportunities which span the value chain broadly including mergers and acquisition, pseudo equity type transactions.

“Provision of drilling rigs and related services, heavy equipment leasing, seismic acquisition and processing, Reservoir Engineering and Field Development Studies as well as core engineering services.”

The NNPC boss said that between 2015 and 2017, the corporation was involved in various project financings of over three billion dollars in new investment capital.

Baru said that the investment include, the 1.2 billion dollars multi-year drilling financing package from 2015 to 2018 for 23 onshore and 13 offshore wells on OMLs 49, 90 and 95 under the NNPC/Chevron JV, termed: Project Cheetah.

Others are NNPC/SPDC JV ($1Billion) – Project Santolina; NNPC/CNL JV ($780Million) – Project Falcon; and NNPC/First E and P JV and Schlumberger ($700Million).

“This year, we have significantly progressed new third-party financings for the NNPC/SPDC JV and NNPC/MPNU JV.

“Both transactions were substantially over-subscribed, the NNPC/SPDC Santolina III Project has an estimated cost of circa $500 million and NNPC/MPN Satellite Field Development II Project has an estimated cost of $1.3 billion (NNPC to raise circa $700 million in third party financing).

“Furthermore, we have initiated third party financing for the NNPC/NAOC Okpai II Independent Power Plant (IPP) project with estimated cost of circa 658.42 million dollars.

“And the NNPC/TEPNG Ikike development project with estimated cost of circa 473.4 million dollars to be funded through prepayment for gas by NLNG. The price balance is to flow to the Federation Account.

“We have successfully initialed the Memorandum of Understanding (Framework Agreement) between NNPC and NLNG for the provision of circa $2.5 billion funding for NNPC’s portion of Cash Call payable on Upstream Gas Supply Projects for SPDC, TEPNG and NAOC JVs, ‘’ Baru said.

He said that the corporation also, initiated negotiations for the Financing and Technical Services Agreements (FTSAs) for identified NPDC Assets – OMLs 13, 65 and 111.

“As you may be aware, NPDC currently contributes about 8 per cent of current national daily production.

“Further developments from these assets and NPDC JV assets is expected to move NPDC to over 300bopd equity.

“We have progressed negotiations with EPC Contractors and potential Chinese lenders on the third-party financing for the Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline Project of $2.89 Billion.

“We have, also, been active in the Frontier Basins as exploratory activities progressed from seismic data acquisition, processing and interpretation to the drilling of the Kolmani River -2 well in the Benue Trough.

“The findings in the Kolmani River -1 by SNEPCO are being confirmed and a lot more interesting information is being revealed by the well as it approaches total depth of 14,250ft,” Baru stated.