Onshore oil exploration is getting a big boost from the Federal Government, which is providing massive support to indigenous oil firms. This is being done in an effort to increase crude oil production, after falling short of OPEC quotas. Although Nigeria cannot control oil prices. However, the government is working to improve oil production in order to reduce the country’s vulnerabilities and make the most of this current oil prices cycle.
There is some hope that competent local players could be making a difference in the shallow water market. A closer look at current activity shows this to be the case. Nearly half of Nigeria’s oil production relies on its onshore fields. However, crude theft and pipeline vandalism make it difficult to increase output in the short term.
In the heat of the COVID-19 pandemic, Nigerian independent First E&P realized its first oil at its Anyala & Madu complex on OMLs 83 and 85. Since this feat, the company has gone on to become the third biggest local producer behind SEEPCo and Seplat Energy. The company’s joint venture which it established with Dangote industries known as West Africa E&P, is now embarking on the evolution of the Kalaekule field on OML 72. Going west, General Hydrocarbon Limited (GHL) which operates OML 120, is also moving ahead with the redevelopment of the Oyo field this year.
These projects are currently supporting offshore market activity in Nigeria and have a common goal which is focusing on local content. Recall that NNPC GMD, Mele Kyari announced IOCs’ divestment from Nigeria. The implication is that Nigeria will be left to rely on its local operators and local services companies to take the lead.
WAEP and GHL have selected the Century Group to provide the FPSOs required for the Kalaekule and Oyo fields. The Century Group is a Nigerian company that provides FPSO solutions. This company is one of the few Nigerian services providers that have, over the years, developed the capacities required to operate and maintain critical oil & gas assets safely and cost-efficiently.
Nigeria has long been seen as a country with big potential, but investors have been hesitant to put their money in due to several risks. However, recent years have seen a rise in local energy companies who have the expertise to successfully operate and maintain critical infrastructure assets. While these companies may not have the same financial power as IOCs, they have proven their ability to navigate Nigeria’s risky business environment. Nigeria has been struggling for months to increase oil production back to its potential. Although the country has a capacity of over 2 million barrels per day, oil output was only at 1.3 million last year. This means Nigeria is importing finished petroleum products, which leaves it open to several risks.
The idea to begin shallow water development is a good one by the Nigerian government to gauge the economic impact the IOCs divestment would usher. However, this is a futuristic projection in terms of its effect on the prices of AGO, PMS and DPK. Hence, not much changes can be projected in the current prices of these commodities.
Source: Oriental News
