Nigeria's deepwater province major source of growth
LONDON, Jan. 28 -- Nigeria's deepwater discoveries constitute 40% of its crude production, and future development requires oil prices above $40/bbl, said Mohammed Barkindo, group managing director of Nigeria National Petroleum Corp. (NNPC).
Speaking at the Offshore West Africa conference in Abuja, Barkindo said the fields in the province—Bonga, Erha, Nda, Abho, Agbara, and Agbami—are major producers.
Other deepwater discoveries such as Agbami, Bonga Main, Erha, Nda, Okwori, and Usan cost $33 billion to develop. Barkindo said, "The Akpo field is expected to come on stream in April with a further addition of about 175,000 b/d of production."
The deepwater Bonga SW, Bonga NW, Usan, and Bosi fields will require $12 billion of investment and will bring Nigeria's production capacity to 1.3 million b/d, he said.
But Barkindo warned that oil prices above $40/bbl are needed to support deepwater projects. As prices have plummeted, fears have increased about operators delaying or canceling them.
Simultaneously construction costs, labor, and security issues have increased over the last few years for domestic and international operators.
"Given the uncertainty in crude prices in the long run, the industry needs to examine ways of achieving a steep reduction in costs," Barkindo said.
Smaller oil discoveries have made it difficult for companies to decide whether to invest in Nigeria's offshore prospects. In 2006, the average offshore discovery would be 20 million boe, whereas in the late 1990s, this peaked at 65 million.
Emmanuel Egbogah, special advisor to the president on petroleum matters, warned that Nigeria could fail to increase oil reserves and exports due to a government funding shortfall.
The government is expected to contribute $6 billion, along with investment from operators, to raise proven oil reserves 5.3% to 40 billion bbl by 2010, he said. The government plans to push oil export capacity to 4 million b/d.
Egbogah said the government and joint venture partners have found "alternative, short-term funding solutions" because the government cannot provide its share. Over the long term, it would be best to create "incorporated joint ventures" that can secure money from financial markets, said Egbogah.
Despite growing demand, he said, natural gas supplies could not reach the domestic market because of the lack of transportation. Nigeria is determined to monetize its gas reserves and boost domestic use under its master plan. It has invited companies to spend over $20 billion developing the sector.
Contact Uchenna Izundu at firstname.lastname@example.org.