Lagos — State-owned oil firm Nigerian National Petroleum Corporation said on Sunday it secured a $1.2 billion loan from domestic and foreign banks to fund drilling in 36 offshore and onshore wells aimed at adding 41,000 b/d to Nigeria's crude oil output.
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The loan packaged by a consortium of creditors led by Standard Chartered Bank and the United Bank of Africa, is to cover NNPC's 60% share of the drilling operations in fields jointly owned with US oil major Chevron.
"The funding package ... is an integral part of the Accelerated Upstream Financing Programme initiated by NNPC to address the perennial challenge experienced by the Federal Government in providing its counterpart funding of [joint venture] upstream activities," NNPC said in a statement.
The funds will be used for the development of 23 onshore and 13 offshore wells in three oil blocks -- OML 49, 90 and 95 -- jointly owned by NNPC and Chevron, over 2015-2018, NNPC said.
The well development program would be carried out in two stages, with the first stage targeted at delivering 21,000 b/d of crude oil and condensate from 19 wells, and 120 MMcf/d of gas by 2016.
The second stage, comprising 17 wells, is projected to yield 20,000 b/d of crude and condensate and 7 MMcf/d of gas production between 2016 and 2018.
The joint venture between NNPC and Chevron accounts for Nigeria's third largest oil output.
According to NNPC, the loan -- apart from supplementing its cash call commitment -- would help to maintain current production levels in the short term as well as replace depleting reserves.
Cash-strapped NNPC has struggled over the years to fund its average 57% equity share in joint venture operations with foreign partners including Shell, ExxonMobil, Total and Eni.
In 2012, US major ExxonMobil inked a $1.5 billion loan deal with NNPC to help the state-owned oil firm finance its share of a joint venture oil exploration campaign targeted at adding 55, 000 b/d of crude oil and 85 MMcf/d of gas to Nigeria's output.
In June, Nigeria's oil industry auditors, the Nigeria Extractive Industries Transparency Initiative, or NEITI, recommended to the government to implement a phased divestment of its equity in joint ventures with the foreign oil partners, to ease the funding issues and leakage of cash due to corruption and waste which have impeded the country's bid to increase production.