• Wednesday, April 17, 2024
businessday logo


Nigeria’s annual offshore drilling expenditure to reach $2.26bn by 2016


  Offshore drilling expenditure in Nigeria, Africa’s leading oil producer, will hit $2.26 billion in 2016, according to the latest report from GBI Research, a business intelligence firm.

The report which provides forecasts for the offshore drilling industry in the Middle-East and Africa region up to 2016, indicates that Nigeria’s drilling expenditure at $2.26 billion, would be second in the region after Angola, followed by Egypt with total of $1.52 billion.

Angola, Africa’s second largest oil producer is expected to remain the biggest spender in the region by some margin, over the next few years at least. GBI Research expects drilling expenditure in the Southern African country to continue climbing in the near future, hitting $6.67 billion in 2016.

An increase in offshore discoveries is prompting a surge in exploration activity across the Middle-East and Africa and driving up the amount spent on drilling, states the latest report form business intelligence firm GBI Research.

The company’s latest oil and gas report forecasts offshore drilling expenditure across the region to climb steadily from $13.56 billion in 2012 to $17.03 billion in 2016. Cumulatively, the total expected spend for this five-year period is $77.3 billion, which represents an increase of approximately 22 percent over the 2007-2011 total of $63.5 billion.

Drilling outlay is expected to grow across all major nations in the region, with those in West Africa leading in terms of exploration activity. Escalating activity in countries relatively new to the offshore drilling industry, such as Sierra Leone and Liberia, may prove to be future competition for the more established nations of West Africa.

Ghana is expected to emerge as one of the most prominent countries in West Africa for the exploration of oil and gas, with 16 offshore discoveries made between 2008 and 2012 – second only to Angola, where 22 discoveries were made during the same period.

The research suggests that oil exploration activity would continue at a rapid pace offshore West Africa, with confirmations of previous discoveries and new finds that indicate more drilling and production ahead.

Already, there have been significant new discoveries in Ghana, Tanzania, Mozambique and Uganda, with prospected fields in other countries, including Sierra Leone, Mali and Kenya.

In Nigeria, no significant investment has been recorded in oil exploration in the last six years and the number of wells drilled has also been on the decline since 2006, according to a November 2012 CBO Capital’s report.

Last year, oil and gas exploration and production company Afren, said it found significant oil reserves at its Ebok North Fault Block well, offshore of south-east Nigeria.

In 2011, Total’s subsidiary, Total E&P Nigeria (TEPNG) made a new oil discovery in the south-eastern corner of Oil Mining Lease (OML) 102 in Nigeria. The discovery is located 65 kms off the southeastern coast of the country, about 15 kms southeast of the Ofon field.

The delay in passing the Petroleum Industry Bill (PIB) has been linked to the decline in offshore drilling in the country, as oil majors have put exploration and development activities on hold.

According to Mutiu Sunmonu, the country chair of Shell companies in Nigeria, its exploration and production arm, Shell Petroleum Development Company (SPDC) has put on hold, investment decisions on two key offshore oil and gas projects that would have cost about $30billion, till when the new petroleum law is approved.

Diezani Alison-Madueke, Minister of Petroleum Resources, had said that the PIB, which passed through second reading in the Senate last week, would ensure the development of Nigeria’s abundant oil and gas reserves, adding that the long delay in the passage of the oil industry reform bill has resulted in rapid decline in new investments in the oil and gas industry.