By Dennis Mernyi
The Nigerian National Petroleum Corporation (NNPC) has signed a $1.04 billion crude oil exploration deal with the African Export-Import Bank (Afreximbank).
The agreement was concluded on Tuesday this week in Durban, South Africa during the second Intra-Africa Trade Fair (IATF 2021), which is held from November 15 to November 21, 2021.
The $1.04 billion finance will facilitate the delivery of 35,000 barrels of crude oil daily via a Forward Sale Agreement (FSA).
In addition, the agreement seeks to boost tax revenues, improve foreign currency receipts, and create jobs in the oil and gas sector.
The NNPC delegation was led by Executive Director and Group Chief Executive Officer, Mr Umor Ajia, to the signing ceremony.
Afreximbank in a statement stated that the transaction comprises a Pre-Export/Shipment Finance Facility underpinned by a Forward Sale Agreement (FSA) and Offtake Contracts from the NNPC acting as the Borrower and Seller.
It pointed out that proceeds from the facility would boost tax revenues and foreign currency receipts to the tune of over $2.4 billion.
The statement reads, “African Export-Import Bank (Afreximbank) has signed a $US1.04 billion facility with the Nigerian National Petroleum Corporation (NNPC) to finance the exploration of petroleum.
“The agreement was concluded yesterday in Durban during the second intra-Africa trade fair, which opened on 15 November and runs until 21 November.
‘’NNPC would enter an FSA within which it shall deliver 35,000 barrels of crude oil per day.
The proceeds of the facility would boost tax revenues and foreign currency receipts and create thousands of jobs in the oil and gas refining value chain, all by more than US$2.4 billion to the immediate benefit of the government thereby improving the balance of trade and Gross Domestic Product in Nigeria – Africa’s largest economy.”
The deal was signed by Mr Umor Ajia, NNPC’s Executive Director and Group Chief Executive Officer, on behalf of NNPC.
The transaction complies with Afreximbank’s mandate to promote local content in Africa’s Oil and Gas and other mining industry and generate foreign receivables into Africa.
President and Chairman of the Board of Directors of Afreximbank, Professor Benedict Oramah was quoted to have lauded the deal as very innovative and explained that the bank’s decision was in the context of the world’s climate change agenda.
He said, “This is a case of adopting a balanced approach. Africa is more of a victim than a perpetrator in the emission of destructive greenhouse gases, contributing only a meager four percent, while a majority of the continent, ironically having been left behind development-wise, still has to depend on fossil fuel for survival.
“They should thus not bear the brunt of the punishment for the mistakes of others. Stopping development for parts of Africa today to achieve a clean environment for the whole world tomorrow is utterly foolhardy.’’
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This recent development will act as a huge boost to NNPC’s quest to be a globally recognized commercial entity and attract more financing and investments into the sector.
Recall that in May 2021, the state oil giant signed a deal with some of the world’s biggest oil companies that could unlock over $10 billion investment in an offshore oilfield.
The corporation and its Production Sharing Contract (PSC) partners namely Shell Nigeria Exploration and Production Company (SNEPCo), Total Exploration and Production Nigeria Limited (TEPNG), Esso Exploration and Production Nigeria Limited (EEPNL), and Nigerian Agip Exploration (NAE), executed agreements to renew Oil Mining Lease (OML) 118 for another 20 years.
