NNPC obtains $1bn for NPDC upstream operations

The Nigerian National Petroleum Corporation (NNPC) has said that it has obtained a prepayment funding of US$1b for Nigerian Petroleum Development Company (NPDC) to support its upstream operations and its subsidiary.

This was disclosed in a statement by the Group General Manager, Group Public Affairs Division of the NNPC, Dr Kennie Obateru in Abuja.

He pointed out that the crude oil prepayment will enable NNPC to pay for NPDC’s tax obligations to the federal government. He noted that the funding is backed by future oil production of NPDC, and utilises a well-established structure to enable the purchaser of the crude, Eagle Export Funding Limited, to raise financing in the domestic and international markets, to fund an upfront payment to NNPC under a Forward Sale Agreement (FSA).

Obateru added that the financing which funded the prepayment had been structured over two tranches: a five-year US dollar amortizing tranche (“Tranche 1”) and a seven-year Nigerian naira amortizing tranche (“Tranche 2”), stating that both tranches benefit from a cash sweep with the 7-year tranche having a 1-year non-call period.

According to him, “These tranches shall be repaid by Eagle Export Funding Limited from the export sale proceeds of the NPDC crude, which in turn are backed by Letters of Credit, issued by banks with a minimum credit rating, in line with market precedent.

“The export price for the crude is the relevant NNPC Official Selling Price (OSP) for the corresponding calendar month and crude grade. Vitol and Matrix Energy have executed the standard NNPC Crude Oil Sale & Purchase Agreement.

“The participants in the Eagle Export Funding Limited deal include Standard Chartered Bank, United Bank for Africa, Afrexim Bank, Union Bank and two oil trading companies, Vitol and Matrix Energy.

“Despite the constrained liquidity situation in the financing markets due to the COVID-19 pandemic; the pricing and terms obtained for the USD and NGN funding tranches were very competitive and better than precedent transactions,” he added.