Lekoil commits $600m for further drilling in Dahomey Basin

Despite the drop in oil prices that have cut capital expenditure in exploration activities, Lekoil Ltd, an indigenous exploration and production company in Nigeria is committing $600million for further exploration activities in the Dahomey basin.

Olalekan Akinyanmi, CEO of Lekoil announced this in his presentation at NAPE’s preconference workshop for its 2016 conference in Lagos on November 14 at Eko Hotel and suites.

“We are going to drill a few wells next year. We are going to commit between $500 and $600 million in phase 1, we should get us production in 2021 for oil,” said Akinyanmi.

Lekoil has substantial interests in Oil Production Leases 310, 325 in the Dahomey basin. Exploration activities led to the Ogo fields oil and gas discovery located in shallow water offshore Lagos in 2013. It lies in the Keta-Togo-Benin Basin.

A large 3D seismic survey was carried out over OPL 310 and OML 113 in early 2014 with final results expected in late 2015. However, the collapse of Afren in July 2015, means there is currently no technical operator on the asset and there is uncertainty

In October 2015, the company announced the acquisition of an indirect controlling interest in OPL 325, (located to the south of OPL 310 in the Dahomey Basin) offshore Nigeria, for an initial consideration of $16.08 million, with other payments due at developmental milestones totalling $24.12 million.

“325 Acquisition is consistent with its continuing strategy to assemble a balanced portfolio of oil and gas interests, including near term production (Otakikpo), appraisal (OPL 310) and high impact exploration assets in known basin (OPL 325),” the company said in an announcement to investors.

Akinyanmi stressed that the company’s future plans revolves very much around developing fields in frontier basins urging the Federal Government to urgently review fiscal terms to drive investments.

A comparative analysis of Nigeria’s fiscal terms and other African countries shows while Nigeria charges royalty rates of as much as 20 per cent, Namibia, Senegal and Mozambique do not charge more than 10 per cent. While Nigeria taxes its investors in oil exploration as much as 85%, Senegal, Namibia, and Mozambique charges less than 35 per cent.

“The implication of this is very clear, an investor will move to a country where he can get the best value,” said Akinyanmi.

Akinyanmi further said that the key to attract investors is to provide investors comfort regarding sanctity of contracts, ease of doing business, transparency and reduce risk of investing in the country.

 

ISAAC ANYAOGU