Schlumberger inks $700 Million Oilfield JV Deal with Nigeria’s NNPC
YENAGOA, Nigeria June 29 (Reuters) – Nigeria’s state oil company said on Thursday it had agreed a joint venture to cover the more than $700 million cost of developing new oil fields in its southern Niger Delta energy hub.
The Nigerian National Petroleum Corporation (NNPC) said it had a tripartite agreement with local energy firm First Exploration and Petroleum Development Company and international oil services company Schlumberger to develop the Anyala and Madu fields under Oil Mining Licence (OML) 83 and 85.
The OPEC member state has been seeking investment to increase its crude oil reserves to 40 billion barrels by the year 2020, up from the current proven reserves of 37.2 billion barrels.
NNPC, in an emailed statement, said under the agreement Schlumberger would provide the $700 million investment in developing the fields, which would add 193 million barrels of crude to current reserves.
The state oil company said it would also add 800 billion cubic feet of gas to Nigeria’s proven gas reserves. Nigeria has the world’s ninth largest gas reserves, at 187 trillion cubic feet (tcf).
“In terms of daily production, the fields will yield 50,000 barrels of crude oil per day and 120 million standard cubic feet of gas per day by early 2019,” NNPC spokesman Ndu Ughamadu said in the statement.
The state oil company said OMLs 83 and 85 were located in shallow waters 40 km (25 miles) offshore.
NNPC said it held a 60 percent interest in the licences, while First Exploration and Petroleum Development Company, operator of the joint venture, held the remaining 40 percent.
Speaking at the signing ceremony as reported by NDU UGHAMADU of the NNPC Group Managing Director of the NNPC, Dr. Maikanti Baru, said the innovative approach to funding JV operations in response to the challenging economic environment was novel and aligned wholly with the government’s aspiration to increase crude oil and gas production, reserves growth and monetization of the nation’s enormous gas resources.
He added that apart from serving as a test case for future funding mechanism, the approach adopted was in sync with the realization of the corporation’s 12 Business Focus Areas (BUFA) which is to ramp up crude oil production and reserves growth, amongst others.
He said the projected increase in production of gas would come in handy as the Corporation strived to sustain the supply of gas to the existing power plants as well as the planned power projects billed to come on board within the period.
Managing Director and CEO, FIRST E&P, Ademola Adeyemi-Bero, who signed on behalf of FIRST E&P, remarked that the partnership between the NNPC/FIRST E&P JV and Schlumberger would infuse a novel asset development model which combines FIRST E&P’s local knowledge and market position as an indigenous operating company, with Schlumberger’s financing and broad technical capabilities.
He added that the joint project team would strengthen FIRST E&P’s project delivery abilities and the model would offer the Upstream subsector a credible alternative funding and technical partnership model for growing production and adding reserves.
On his part, Patrick Schorn, Vice President, Schlumberger, who signed on behalf of Schlumberger traced the advent of the multi-national oil fields service company in Nigeria to the first commercial oil find in Oloibiri when Schlumberger played a role in Shell’s drilling effort.
He noted that this Oilfield JV with NNPC and FIRST E&P would provide Schlumberger the opportunity to leverage on its reservoir knowledge, oilfield services and project management expertise to lower development costs and maximize value for the partners.
The OMLs 83& 85 are located in shallow waters 40 km offshore in the Niger Delta, NNPC holds 60% interest in the licences while, FIRST E&P, the operator of the JV, holds the remaining 40% 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 be established to drive technology transfer whilst leveraging on the global technical expertise of Schlumberger and the extensive local knowledge of the JV partners.