Neconde is doubling down on gas

Indigenous oil producer, Neconde is pushing to double its gas footprint in Nigeria’s energy sector with an ambition to double its current 80 million scf per day production.

“Our plan is to increase our associated gas production to 80 million scf per day, and that requires putting in place more gas infrastructure,” said Chichi Emenike, head of Gas Ventures, Neconde Energy Limited Neconde, a subsidiary of the Nestoil Group, a Nigerian exploration and production company with offices in Lagos, Warri, Port Harcourt and Abuja.

Emenike said the company has developed a central processing facility which still requires additional infrastructure, including pipelines.

Neconde is revamping the Central Processing Facility (CPF) for gas in Odidi to deliver up to 80 MMscf/d to Escravos-Lagos Pipeline System (ELPS).

“We have off-takers who have also indicated interest. They are currently discussing with us. In the long term, we’re looking at the non-associated gas,” Emenike said.

Emenike said Neconde is also looking at putting in place Liquefied Petroleum Gas infrastructure. “We have a lot of the LPG in Nigeria but unfortunately the per-capital usage is small compared to other countries such as Ghana and Senegal.”

She called for pragmatic policies including willing-seller and buyer arrangements and for the government to provide enabling environment through tax waivers to incentivise more gas adoption locally.

Since acquiring 45% stake in OML 42 previously held by a consortium of International Oil Companies (Shell, Total Exploration and Production Nigeria Limited, and Nigerian Agip Oil Company Limited), Neconde has emerged a prolific indigenous oil producer, successfully navigating the critical security issues that caused the IOCs to abandon the lease.

OML 42 is located onshore West Delta with an area of 814 km2. OML 42 has 7 fields which have produced hydrocarbons and 5 undeveloped discoveries. The 2P reserves stand at 600 MMbbls.

Crude oil had been produced since 1969 from the seven fields in OML 42 using flow stations at Egwa, Batan, Ajuju, Odidi and Jones Creek until 2005 due to security issues. Production fell from as high as 250,000 bpd to around 50,000 bpd.

In early 2012, Neconde and NPDC agreed a work program to rehabilitate the remaining shut-in fields to reopen about 80 wells for production. In October 2013, rehabilitation works started in Odidi field and it was re-opened in October 2014. Odidi is currently producing at 22,000 bopd. Rehabilitation works at Jones Creek started in July 2014 and was completed in August 2015. Production from Jones Creek currently stands as 36,000 bopd. Egwa rehabilitation has commenced and is expected to complete in 2019 with production of 20,000 bopd.

“The fact that a wholly indigenous joint venture (JV) has progressively revived this asset speaks to the capacity of indigenous companies in the oil and gas sector if given the right opportunities,” said Ernest Azudialu-Obiejesi group managing director, Nestoil Group and chairman of Neconde at the last Nigerian Gas Conference.

In June this year, a consortium of seven local and international lenders signed an agreement to refinance Neconde Energy Limited’s existing Senior Secured Medium-Term Loan Facility Agreement worth $640 million, following a 20-year renewal of its Oil Mining Licence (OML).

Neconde seeks to deliver 500 MMScf/d to the domestic gas market within the next five years.