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Nigeria signs deal for financing 36 oil wells

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
File photo shows Nigeria's Port Harcourt refinery, which was built in 1989, in Port Harcourt, Rivers State. ©AFP

The Nigerian National Petroleum Corporation (NNPC) says it has signed a deal with a consortium of local and foreign investors to develop 36 oil wells.

The company released a statement on Sunday saying that the agreement will not only help develop the country’s oil wells, but also boost domestic power generation in Africa's largest crude producer, AFP reported.

NNPC has secured "a USD 1.2 billion multi-year drilling and financing package for 36 offshore/onshore oil wells," the statement added.

The company also stated that the deal was signed in London at the weekend in order to help Abuja maintain its current oil production levels and to replace depleting reserves.

Oil accounts for over 90 percent of Nigeria's foreign exchange revenues but the country’s economy has been badly hurt by the global oil price slump since mid-2014.

After coming to power in May, the new government of President Muhammadu Buhari, said it inherited an "almost empty" economy and is struggling to pay its bills.

Nigeria is Africa's largest oil producer, exporting about two million barrels per day of crude oil and has crude reserves of 37.4 billion barrels.

According to sources at the NNPC, the 36 oil wells will be developed in two stages between 2015 and 2018.

"Stage one comprising 19 wells is projected to deliver 21,000 barrels of crude oil and condensate per day alongside 120,000 million standard cubic feet of gas per day (mmscf/d), over 2015 and 2016," the company’s statement said, adding, "Stage two, comprising 17 wells, is projected to yield 20,000 barrels of crude oil and condensate per day alongside gas production of seven mmscf/d between 2016 and 2018."

The NNPC further noted that the project would generate between USD 2 to USD 5 billion in revenues for cash-strapped Nigeria.

The statement also explained that apart from the contribution to the country’s revenues, the projected gas production -- the electricity equivalent of 400 megawatts -- "would help boost the federal government's domestic gas aspirations with ... (a) positive effect on power supply."

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