When it comes to the prospects of its oil industry, Africa’s biggest oil-producing country is looking miles out to sea in untapped ultra-deepwater fields.
Nigeria’s deepwater assets hold huge potential in development of the country’s oil and gas sector, accounting for 40.47 percent of the total production of 2.1 million barrels per day (bpd). However, only seven out of the 87 deepwater oil blocks in Nigeria are producing, while six are at different phases of development.
Assets with 13 billion barrels of oil equivalent remain untapped in Nigeria’s deep offshore area, a development which has raised huge investment concerns for stakeholders in the country’s oil and gas sector.
Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), on Tuesday said the country would conduct bid rounds on oil assets within the ultra-deep waters next year.
“The ultra-deep waters are completely unexplored today. Before the end of this year or next year, God willing, I believe there will be some form of bid rounds in ultra-deep waters oil assets,” Kyari said at the ongoing 37th annual international conference of the Nigerian Association of Petroleum Explorationists (NAPE) in Lagos.
“I do not have the time but I know there is a process that is going on,” he said.
In the oil and gas industry, deepwater oil fields are defined as oil fields within water depth greater than 1,000 feet while ultra-deepwater oil fields are greater than 5,000 feet.
When BusinessDay asked the NNPC boss on the sidelines of the event if Nigeria has enough ultra deepwater oil blocks for the bid rounds, he said, “I can assure you there will be enough blocks.”
Ahmadu-Musa Kida, deputy managing director, deepwater district, Total Exploration and Production, said at the pre-conference event that Nigeria’s untapped oil assets have hit an all-time high.
He also emphasised the need for the nation’s oil industry to encourage digital application in the deep offshore assets, saying that the development would cut capital expenditure by 20 percent.
“Total would continually deploy technology and innovation in its deep offshore operations with a view to deepening its presence in the oil and gas sector,” he said.
Aside from Bonga field, other deepwater fields such as Chevron Agbami field, ExxonMobil Erha field, Nigerian Agip Exploration Aboh field, Total Exploration and Production Akpo and Usan fields, and the most recent, Egina field, have all started production in full swing, yet at least 80 other deepwater oil blocks are yet to begin operations.
Nigeria is currently pumping just over 2 million barrels of oil a day and it plans to roughly double that by 2020, a target that could prove difficult to achieve given delays that often occur in developments.
Analysis on lists of projects sanctioned for commissioning between 2010 and 2020 showed that Final Investment Decisions (FIDs) on major deepwater development projects have stalled as most FIDs that spiked hopes of return of deepwater field development activities fell off the table following disputes over the implementation of the existing 1993 production contracts that spurred the first phase of exploration investment in the terrain.
For instance, Total is seeking to sell its 12.5 percent stake in a major deepwater oilfield off the coast of Nigeria, industry and banking sources said, in an effort to adjust the energy company’s Africa portfolio amid a broad expansion.
The block includes the Bonga field, Nigeria’s first deepwater project which started in 2005 and produced around 225,000 barrels of oil and 150 million standard cubic feet of gas per day at its peak.
Output from the block is planned to grow sharply with the $10 billion development of the Bonga Southwest field which is expected to produce up to 200,000 bpd, roughly 10 percent of Nigeria’s current oil production.
Italian Eni and Anglo-Dutch Shell are working with NNPC to reach FID on Zabazaba and Etan deepwater fields 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.
According to offshore technology, the Zabazaba and Etan fields are estimated to hold a combined total of 560 million barrels of oil-equivalent (mboe).
ExxonMobil also has existing plans for three deepwater development projects envisaged to increase production by 230,000 barrels per day. The company’s Satellite Field Development Programme was planned to come on stream as from 2020 with 80,000 barrels per day but no progress has been made on the FID.
Also, the American oil major is yet to decide project timelines and budget estimates for development of operated Bosi deepwater field expected to deliver 135,000 barrels per day and 260 million standard cubic feet of gas per day from deep offshore.
The company which is also the country’s offshore industry champion has been unable to ignite negotiations on development of operated Uge deepwater field which was earlier planned to start production of 110,000 barrels and 20 million standard cubic feet of gas per day by 2020.
Chevron is also silent on development plans for operated Nsiko deepwater field which has projected estimate for production of 110,000 barrels of oil from the deep offshore by 2020.
OLUSOLA BELLO & DIPO OLADEHINDE
