- Gets further commitments from Sinopec, CNOOC to close $20bn upstream deals in months
Ejiofor Alike in Lagos and Chineme Okafor in Abuja
The Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, has signed Memorandums of Understanding (MoUs) with several Chinese firms for over $80 billion new investments, spanning five years, in the oil and gas industry covering pipelines, refineries, gas and power, facility refurbishments and upstream financing.
Speaking exclusively yesterday from Beijing, China, Kachikwu said the agreements had been executed during the three-day roadshow in the Asian country to attract investments to Nigeria’s oil and gas sector.
The objective, he said, is to bridge the infrastructure funding gaps in the Nigerian oil and gas sector.
He said: “I can confirm that we had a successful outing and finally raised investment commitments and signed MoUs worth $80 billion.
“Out of this, $10 billion approximately was raised on the sides with our steer and push for two Nigerian companies – Delta Tek and Salvic Petroleum – while the balance of $70 billion includes MoUs signed by investors and financiers for projects with the Nigerian National Petroleum Corporation (NNPC).”
Salvic Petroleum is a company founded and chaired by Dr. ABC Orjiako, who is also the Chairman of foremost Nigerian oil independent, Seplat Petroleum Plc.
Kachikwu also revealed that other than the agreements executed for investments totalling $80 billion, he also got commitments from Sinopec and China National Offshore Oil Corporation (CNOOC) to commit to further investments in Nigeria’s upstream oil sub-sector to the tune of $20 billion, which would be concluded in the next few months.
This, he said, would effectively bring the total amount of prospective investments by Chinese firms over a five-year period to over $100 billion.
“Outside these (MoUs for $80 billion investments), the two largest oil companies in China, Sinopec and CNOOC, signed investment MoUs agreeing to announce after further discussions on major investment increases in the Nigerian oil and gas in the next few months.
“Given the areas of focus of these two companies, we do not expect that investment to be less than $20 billion. The net effect of these and other agreements in principle reached with investor interest in China on this roadshow will potentially provide investment funds for Nigerian oil and gas of over $100 billion over the next five years.
“These investments cover every facet of Nigeria’s oil and gas sector – upstream, pipelines, downstream, gas and power, modular refining in the creeks, engineering services, etc.
“It has been a fantastic outing and if we can follow through on all these, it will change the face of Nigeria’s oil and gas forever. This will bring hope even to the Niger Delta and is the single biggest amount of MoUs signed on investment in any third world country in a roadshow,” he said.
The minister informed THISDAY that his ministry and NNPC would work round the clock over the next few months to perfect all the documents and meet all the conditions precedent to draw down on the commitments made by the Chinese firms.
“We will work round the clock to meet the conditions precedent to draw down and make these investments a reality. Of course, the federal government’s approval on certain commitments will be required as these involve sovereign guarantees.
“But the number of projects that require sovereign guarantees are very limited, as most of them are build and operate projects such as the pipelines and refineries, which are attractive prospects for the Chinese firms that have expressed interest in coming to Nigeria.”
He added that unlike the oil-for-infrastructure deals with Chinese, Korean and Indian firms entered into by the Olusegun Obasanjo administration, but all went burst due to the federal government’s inability to meet its own side of the bargain, the projects would not be paid for with oil, adding that the returns on investments made by the Chinese would come from the projects.
Also speaking to THISDAY yesterday, an official in the petroleum ministry said Kachikwu signed the MoUs with companies that included China North Industries Corporation (NORINCO), CINDA, CNOOC, Chem China and Sinopec/Addax and ICC-NDRC, among others.
He said: “The huge success of the roadshow leveraged on the minister’s 30 years experience and contacts in the oil and gas industry, as well as President Muhammadu Buhari’s leadership and support.”
He added that the roadshow was a fallout of two months of planning by officials of NNPC and the petroleum ministry that targeted investment meetings with 38 Chinese firms.
“Other roadshows to India and the Gulf states are planned by Dr. Kachikwu for July and August should there be a need for this.
“This show of support reflects the growing international confidence in Nigeria’s oil and gas sector following major reforms over the last seven months and belief in the government and integrity of President Buhari by foreign governments and investors.”
Following THISDAY’s enquiries, a statement provided by NNPC also said: “The Nigerian National Petroleum Corporation wishes to announce the recent landmark strides the corporation has achieved in its bid to bridge the infrastructure funding gaps in the Nigerian oil and gas sector.
“This comes in the form of a first of its kind roadshow in China where memorandums of understanding (MOUs) worth over $80 billion to be spent on investments in oil and gas infrastructure – pipelines, refineries, power, facility refurbishments and upstream – have been signed with Chinese companies.
“Dr. Kachikwu, while speaking during the plenary of a special Investors’ Roundtable which had in attendance over 300 Chinese and Nigerian businessmen and investors with a key focus on the oil and gas sector, reiterated that the roadshow was organised as a follow up to the earlier working visit of President Muhammadu Buhari to China in April, 2016.
“He further commended the efforts and resolve of the president whose steer and support in ensuring that there is a marked transformation of the oil and gas industry has inspired the management to work towards institutionalising of focus, accountability, commitment and transparency at the corporation.”
NNPC added that the International Cooperation Commission (ICC) of the National Development and Reform Commission (NDRC), in charge of implementing cooperation between the Chinese government, foreign governments and organisations, had committed to developing an overarching master plan for the Nigerian oil and gas sector that would include a detailed feasibility study of the current status of existing infrastructure in the industry.
“They will also develop bankable projects that would attract Chinese investors on this government-to-government platform. This initiative would move us to a much more profitable and efficient state. The master plan would form the basis of massive inflow of further investment from Chinese companies into the sector.
“At the end of the plenary, Dr. Kachikwu expressed his gratitude to the Chinese government and investors for the show of support which reflects the growing international confidence in Nigeria’s oil and gas sector following the major reforms that have been overseen under his leadership as both Group Managing Director of NNPC and Minister of State, Petroleum Resources over the last seven months, and also the belief in the government and integrity of President Buhari by foreign governments and investors.
“Dr. Kachikwu further mentioned that the China roadshow is the first of many investor roadshows intended for raising funds to support the Oil and Gas Infrastructure Roadmap. Roadshows have been slated for India and the Gulf states,” NNPC said.