…Bags SPE Africa Regional Public Service Award
Group Managing Director of the Corporation, Dr. Maikanti Baru, on Monday disclosed that the decision by the corporation to seek alternative financing models for funding its Joint Venture (JV) obligations has continued to restore confidence among investors and stimulate further Foreign Direct Investments (FDI) in the nation’s oil and gas industry.
“To turn the wheel of the industry and ensure that funding doesn’t limit our growth, it is important we consider both the traditional and non-traditional funding options,” Baru said, while speaking at the 42nd Society of Petroleum Engineers (SPE) Nigerian Annual International Conference & Exhibition (NAICE) in Lagos.
In a paper entitled: “Revamping the Nigeria Oil & Gas Industry through Alternative Funding: Opportunities, Challenges, Innovations & Solutions”, Baru said alternative financing has deepened local banks’ participation in the upstream sub-sector of the industry.
He noted that with sustainable funding, deep-water Production Sharing (which currently accounts for 41% of daily national production) has risen over the years, with over 2000% production growth recorded within the last ten years.
The NNPC helmsman said in order to meet government expenditure and strategic focus, the Corporation had to explore alternative financing, which he further described as “important to the sustenance of the industry.”
He charged participants at the conference to pay attention to the increasing global competition, which he identified as competition for new production centres across the globe (especially in Africa), shale oil in the US, Argentina and other places; and the competition in terms of crude oil quality.
He observed that traditionally, Nigeria had raised funds utilising equity or self-funding from cash-flow, commercial debt instrument or partner funding in form of Carry or Modified Carry Arrangement (MCAs).
He identified the non-traditional funding options to include contractor-financing/deferred payment, Pension Funds, Private Equity, Sovereign Wealth Funds, Export Credit Agencies (ECAs) and none-less Islamic/Sharia Finance.
“There is need to sustain the Industry for it to continue to deliver the much needed revenue and provide the springboard for economic diversification. We must therefore keep the goose which lays the golden egg alive,” Baru noted.
He expressed the Corporation’s appreciation to its partners, government, and financiers for their cooperation and zeal to move the Industry forward, adding that” “Our goal remains value delivery for all”.
In his address, the Minister of State for Petroleum Resources, Dr Ibe Kachikwu, who was represented by his Senior Technical Assistant (STA), Engr. Johnson Awoyemi, said the Federal Government has demonstrated commitment towards strengthening the industry by giving approval to the relevant oil and gas policies as championed by the Petroleum Industry Bill (PIB).
Also speaking, the Chairman, SPE Nigeria Council, Mr Chikezie Nwosu, called for immediate action to leverage the opportunities presented by the industry to develop other sectors.
Highlight of the occasion was the conferment of the SPE Regional Service Award (Africa) on the GMD for his distinguished leadership and service to the nation’s oil and gas industry.