Africa’s biggest oil-producing country can bring eight major idle oil fields online, offering a potential boost of 900,000 barrels per day (bpd) to the country’s ailing energy output.
Nigeria sits atop 36 billion barrels of crude oil reserves and 206 trillion cubic feet of proven gas reserve but has seen a steep decline in investments in the vital oil sector in recent years.
Oil receipts fund the country’s budget, but many oil and gas projects lie idle, threatening the target set over a decade ago to raise reserves to 40 billion barrels.
These big-ticket projects include Zabazaba 150,000 bpd; Shell’s Bonga South West, 225,000bpd; Bonga North project, 100,000 bpd; Chevron Nsiko project,100,000 bpd; Exxonmobil’s Bosi; 140,000 bpd; Satellite Field development phase, 80,000 bpd and Ude 110,000 bpd.
Oil experts surveyed by BusinessDay say Nigeria’s path to economic prosperity may lie in optimising idle assets, a development that will require disciplined planning, economic reforms and consistent government policies that can inspire investors’ confidence.
They said the projected gains from Nigeria’s oil and gas sector following the passage of the PIA have remained a mirage as poor implementation leaves principal actors in a battle for supremacy and revenue.
“Officials at both regulatory agencies and other agencies still demand bribes to attend to licences and approvals, and the delay in the process and bureaucratic obstacles did not change,” a senior industry source who pleaded not to be quoted said.
Austin Avuru, executive chairman and founder of AA Holdings Limited said the Nigerian oil and gas industry requires an annual $25 billion investment in the next 10 years to achieve efficient optimisation of its resources as the world moves towards cleaner energy.
“We need to invest $25 billion annually to stabilize production at 2 million barrels per day,” Avuru during his last month presentation at the Harvard Business School (Association of Nigeria) event in Nigeria’s commercial capital.
“This investment is crucial to ensure the sustainability of the sector and its contribution to the national economy,” he added
Other experts questioned the length at which Nigerian National Petroleum Company (NNPC) Ltd went to secure a $3.2 billion loan from the African Export-Import Bank (Afrexim).
They said the NNPC is not the finance ministry that should be assigning itself the mandate of supporting the naira.
“The state-owned company should ordinarily be ashamed and concerned that the drop in crude oil output, which will help worsen the value of the naira, is largely of its own doing,” Africa Oil+ Gas Report, an energy intelligence publication said.
It added, “The state-owned company should be focusing single-mindedly on improving its technical efficiency so it can deliver more of the crude oil-locked behind pipes as a result of its suboptimal operational procedures- into terminals”.
“While the general perception is that NNPC is mainly a joint venture partner in producing assets that it doesn’t operate, the reality is that NNPC has 100 percent in several producing assets, most of them underperforming because of the company’s poor technical delivery,” the report said.
BsuinessDay’s findings showed NNPC operates the Okono/Okpoho fields in Oil Mining Lease (OML) 119 offshore NigerDelta, free of any encumbrances of pipeline evacuation.
“The low output of 10,000bpd, at which the company has been stuck for over the last five years is not due to geology, but facility constraints. NNPC insiders know they can produce 30,000 bpd readily. But it won’t happen,” Africa Oil+ Gas Report said.
Tunde Adenikan, a senior energy analyst with a global law firm, said the expected confidence on the part of investors has not happened because the old system of opacity has not given way to a new regime of transparency and accountability.
“There are still reports of corruption among operators who are slow to adjust their ways,” Adenikan said.
Breakdown of idle fields
Zabazaba (150,000 bpd)
The Zabazaba field is a twin asset with Etan field; They are located in oil prospecting lease (OPL) 245 offshore Nigeria in the Niger Delta of the Gulf of Guinea, in water depths ranging from 1,200m-2,400m.
The oil and gas fields form part of an integrated project, which is being jointly developed by Nigerian Agip Exploration (NAE) and Shell Nigeria Exploration and Production Company (SNEPCO).
Operations at the oil-rich block have been halted for more than a decade by a series of trials and competing legal claims. The area is considered to be potentially one of the richest concessions in the country, with recoverable reserves of 560 million barrels, according to Eni’s estimates.
In 2011, Shell and Italian oil giant Eni paid $1.1 billion for OPL 245, an oil block located on the southern edge of the Niger Delta allegedly knowing that the money would go to a front company secretly owned by a former Nigerian oil minister, Dan Etete, who had been convicted for money-laundering.
Etete was accused of awarding himself the block while in office under the former military dictator Sani Abacha, through Malabu Oil and Gas, a company he owned.
Eni, Shell and some of their former and current managers had already been definitively acquitted last year in a criminal case in Milan, in which they were accused of knowing that much of the $1.1 billion they paid to acquire OPL 245 would be distributed as bribes.
Even after that verdict, a civil suit continued, with Nigeria seeking combined compensation of $3.5 billion from Eni and Shell, claiming the amount reflected the real value of the licence purchased in 2011 by the two companies.
Nigeria is betting that the withdrawal of the lawsuit would spur oil majors to resume operations in both the OPL 245 and several other fields that have been abandoned by international oil companies (IOCs).
But analysts say the issue is more nuanced. Ending the civil action “is a very good step, especially when you consider that the asset is very prolific,” Ayodele Oni, energy lawyer and partner at Bloomfield Law firm, said. “No one was going to invest with the dispute until the same was resolved.”
Shell’s Bonga South West, 225,000bpd
Bonga, Nigeria’s first deep-water oilfield, can produce 225,000 barrels of crude oil and 150 million standard cubic feet of gas per day.
Last year, Shell Group said that it would provide $5 billion investment opportunity in the Bonga North project off the shores of Nigeria, located in the deep water.
“We are very focused on resolving all investment-related issues. There is no bottleneck that is too difficult for us to remove in our determined march toward making Nigeria the African haven for large-scale investment in all key sectors”, President Bola Tinubu told a Shell delegation last December.
Bonga Southwest/Aparo is a conventional oil development located in deepwater in Nigeria and is operated by Shell Nigeria Exploration & Production. Discovered in 2001, Bonga Southwest/Aparo lies in block OML 118 (OPL 212P), OML 140 (OPL 249), and OML 132 (OPL 213), with water depth of around 4,395 feet.
Production from the Bonga Southwest/Aparo conventional oil development project is expected to begin in 2026 and is forecast to peak in 2027, to approximately 146,765 bpd of crude oil and condensate and 157 Mmcfd of natural gas.
Bonga North project, 100,000 bpd
Bonga North is a conventional oil development located in deepwater in Nigeria and is operated by Shell Nigeria Exploration & Production.
According to GlobalData, who tracks more than 34,000 active and developing oil and gas fields worldwide, Bonga North was discovered in 2005, lies in block OML 118 (OPL 212P), with water depth of around 3,346 feet.
Chevron Nsiko project
Chevron operates and holds a 95 percent interest in the Nsiko discovery in OML 140, which lies in approximately 5,800 feet (1,768 m) of water, 90 miles (145 km) off the coast of the western Niger Delta region.
The field has a capacity of 100,000 bpd
ExxonMobil’s Bosi; 140,000 bpd;
The sanction for ExxonMobil-operated Bosi field development has been much slower than would have ordinarily been expected of this 1996 discovery. Production is expected to be around 140,000 bpd optimum.
Satellite Field development phase 80,000 bpd
Ude field 110,000 bpd
