Nigeria’s state-owned oil company, Nigerian National Petroleum Commission (NNPC) is seeking new funding options that will enable operators in the country’s oil and gas industry to increase exploration to 40 billion barrels reserves and 3 million barrels a day production by 2020.
The Group Managing Director of NNPC, Dr Maikanti Baru said the operators have been grappling with funding challenges which have cut down investment in oil exploration.
While speaking at the 36th Nigerian Association of Petroleum Explorationists (NAPE) in Lagos, Baru said the corporation believed that attracting fresh funds to the industry is the way forward to achieve the target by 2020.
The NNPC boss added that the country had already set the achievable target of 40 billion barrels oil reserves and three million barrels a day production by 2020.
Baru said currently, as a physical incentive, all exploration cost within the industry is expensed, which is a laudable and pro-industry incentive from the government.
The implications, according to Baru, is that funding needs to be incurred prior to taking benefits.
Baru further stressed that the NNPC is willing to work with partners in the industry to strengthen the funding structure of oil exploration.
“We would open up new fields in terms of marginal fields development, dormant assets and new assets, as there are still condensing prospects for new oil and gas reserves in Nigeria, particularly in the ultra-deepwater and inland frontier basins, and the timing and process must be transparent.
“If this is done on a consistent basis, the nation’s reserve replacement ratio, newly discovered reserves versus productions in the next 10 years will be more than double.”
How NNPC intend to raise the funding
The funds, according to Baru, could be raised from the Nigerian Content Development Monitoring Board (NCDMB), Local Content Fund or from the Central Bank of Nigeria (CBN), Seismic exploration support fund for the Seismic survey in underexplored areas of the country.
Baru suggested that a revolving special fund could be created for the country’s hydrocarbon exploration on contributory funding basis.