Alternative funding share of crude oil production hits 25%

The share of alternative funding option in  joint venture arrangement in crude oil production reached 25 percent  in the last 10 years as shown  in the 2014 Oil and Gas Industry Report released by BusinessDay Research and Intelligence Unit (BRIU).

Alternative funding option was introduced because the upstream industry needs to maintain a massive investment of some $6-7 billion per year between 2003 and 2007.

The large level of investment arose from the underfunding of previous years, coupled with the need to upgrade ageing infrastructure and de-bottleneck facilities, as well as to meet the growth aspirations set out in the Nigerian Vision 2020 document.

A decade after, alternative funding contributed more than 25 percent to joint venture total crude oil production. As at 2013, out of 406.41 million barrels produced by joint venture and alternative funding option, alternative funding accounted for 99.98 million barrels.

The most recently released data by Nigerian National Petroleum Corporation (NNPC) shows that alternative funding share of joint venture reached 48 percent in January 2014. This is 2 percent above the 45 percent projected in the BusinessDay Oil and Gas Industry Report With annual growth rate of 13 percent, alternative funding arrangement is expected to account for more than 45 percent of joint venture crude oil production by 2015. This indicates that joint venture financing is now moving away from government cash call to relying on alternative funding.

Among the joint venture companies, Mobil Producing Nigeria (MPN) alternative funding arrangement contributed the largest chunk of crude oil produced by joint venture in 2013. It produced 70.92 million barrels which represents 71 percent of total alternative funding crude oil production.

Chevron Nigeria Limited occupied the second place with alternative funding production of 16.03 million barrels while Total Exploration and Production Limited alternative funding share of crude oil production stood at 11.69 million.

Olowa Peter