Nigeria’s Largest Oil Independent to Spend $5 Billion to Boost Output

(Bloomberg) -- Nigeria's largest independent oil producer plans to spend as much as $5 billion to boost its oil and natural gas production in the next five years.

Aiteo Eastern E&P Co. plans to drill new oil wells and re-open existing ones as it seeks to raise production, Chief Executive Officer Victor Okoronkwo said Tuesday in an interview in Abuja, Nigeria. It will also seek to increase its stake in a joint venture with Nigeria's state oil company.

“We have a development plan which has been submitted to our joint venture partner NNPC,” he said.

The Nigerian government has made changes to how operators can raise funds, moving away from the so-called cash call model whereby partners contribute in line with their stake in a joint venture. That gives operators more freedom to secure financing. Nigeria is also cutting its holdings in joint ventures in order to raise cash.

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“Our expectation is that in line with the joint venture agreement between us and the federal government, the existing partner will have the right of first refusal,” Okoronkwo said. Aiteo has a share of 45% in Oil Mining Lease 29, with state-owned Nigerian National Petroleum Corp. holding the remainder.

Aiteo is among Nigerian producers that bought oil leases from majors such as Royal Dutch Shell Plc when overseas operators curbed operations in the West African nation due to oil attacks on infrastructures. The repeated halting of its Nembe Creek Trunk Line, which runs to Shell's export terminal for Bonny crude, has cost Aiteo and the government at least $2 billion in revenue over the last two years, Okoronkwo said.

Aiteo currently pumps about 90,000 barrels of oil a day and forecasts production of 250,000 barrels in five years under the planned expansion. Daily natural gas production would increase six-fold to 300 million standard cubic feet in the period, Okoronkwo said.

To contact the reporter on this story: Elisha Bala-Gbogbo in Abuja at ebalagbogbo@bloomberg.net

To contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, ;Anthony Osae-Brown at aosaebrown2@bloomberg.net, Rachel Graham, John Deane

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