The Nigerian National Petroleum Corporation (NNPC) and Mobil Producing Nigeria Unlimited (MPN), a subsidiary of ExxonMobil Corporation, at the weekend, signed the financing documents for construction of the $1.275 billion (about N173.4billion) Natural Gas Liquids (NGL) Expansion Project.
It is expected that when completed, the plant will produce 185 million barrels of NGL during the life of the project, and further contribute to the reduction of gas flaring and associated carbon dioxide emissions, and generate additional foreign exchange revenues for Nigeria by monetizing natural gas reserves.
Mr. Funsho Kupolokun, the group managing director of the NNPC, had while speaking at the signing ceremony disclosed that construction work on the project is expected to begin in November this year and be completed three years later, between late 2007 and early 2008.
“The project is expected to produce approximately 42,000 barrels of NGLs per day on average, effectively doubling NGL production from the JV (joint venture).
In addition, the project is expected to generate gross revenues of over $360 million (N48.960 billion) per year for the JV, which represents combined gross revenues from NGL 1 and 11 of over $690 million per year,” he disclosed. It would be recalled that the current project is an expansion of the JV’s successful completion and operation of an existing facility which produces 38,000 barrels of NGLs per day. It was commissioned in 1998.
Mr Kupolokun disclosed that the gross revenues accruing to the partners from the NGL I facility is approximately $330 million (N44.880 billion) per year, depending on the spot price of NGLs.
The NGL 11 project is being financed with loans from Nigerian banks including UBA, Union and Standard Trust; loans/guarantees from the U.S. Government’s Overseas Private Investment Corporation (OPIC) and investment bank, Credit Suisse First Boston; a sponsor pari-passu loan was also structured alongside the senior debt.
Credit Suisse First Boston LLC also served as exclusive financial advisor to NNPC and Mobil Producing Nigeria on the transaction.
The sponsors also disclosed that the project’s financing plan is considered innovative as it utilises a forward sale structure to enable the sponsors raise 100 per cent of the project financing requirements.
