The Nigerian National Petroleum Company Limited (NNPC) Ltd has said that Nigeria has over 35 billion barrels of proven reserves of crude that are yet to be exploited.
It stated that these reserves can be used to raise the required funding, amongst other things, by utilising a forward sale financing.
It explained that this strategy helps securitise Nigeria’s proven oil reserves, which can immediately improve the inflow of foreign currency rather than waiting for years.
NNPC Ltd in an explanation made public on Monday also said that forward-sale financing can significantly boost the availability of foreign currency for an oil/gas-dependent country by supporting more exports and bringing in overseas funding.
It said: “This helps to improve the country’s ability to pay for imports and manage its overall economy. The forward-sale investments are repaid using the money earned from exports when they finally start by improving the country’s balance of payments, providing the government with more stable and predictable oil earnings, which helps in planning budgets and managing foreign exchange reserves.
“NNPC Limited’s Project Gazelle is a forward-thinking financial strategy that aligns operational needs with broader economic goals by utilising future crude oil sales for immediate funding, enhancing liquidity, and contributing to Nigeria’s foreign exchange reserves.
“This project showcases NNPC Limited’s operational autonomy and financial acumen while ensuring immediate liquidity, minimising the impact on future earnings, and potentially enhancing Nigeria’s credit rating. The repayments are strategically planned and tied to future oil sales, with conservative pricing in oil sales contracts mitigating the risks associated with oil price volatility.
“In line with the provisions of the latest Petroleum Industry Act (PIA) and NNPC Limited’s journey towards operational excellence and economic contribution as a Limited Liability Company, Project Gazelle balances immediate financial requirements with long-term sustainability.”
SOURCE: iwitnesslive.com