Nigerian oil sector enters new phase of growth thanks to local firms
Nigeria's oil and gas industry is undergoing a major shift as local companies take on a greater role, resulting in a new phase for innovation and growth.
The companies that are leading the charge include those who have purchased onshore and shallow-water assets from oil majors, which plan to invest billions of dollars in developing abandoned fields.
Even smaller producers are contributing. For example, Nigeria's Otakikpo crude terminal was the first onshore crude terminal to be developed and operated locally. It began loading operations Monday. It was built by Green Energy Limited in the OML11 block near Port Harcourt. This marks a significant milestone for local capacity.
Shell has loaded its first crude oil cargo at the terminal with a capacity of 360,000 barrels per day (bpd) on Monday. This opens up drilling opportunities for more than 40 stranded gas fields in the area.
Conoil Producing Limited has also recently shipped its first cargo of the new Obodo blend crude from the Niger Delta's onshore OML 150. Oando Trading was responsible for the cargo, which was purchased by Oando Plc from ENI.
Renaissance Africa Energy, which acquired Shell's assets onshore in the past year, has committed to invest $15 billion in its oil-and-gas operations over the next five. The company wants to increase its crude oil output and double its gas production once the local gas pipeline has been completed.
Seplat Energy recently announced its plans to reopen the 400 wells that were previously closed. This follows ExxonMobil acquiring ExxonMobil Nigeria's shallow-water assets. CEO Roger Brown announced that the company will invest up to $120 million in infrastructure and drilling campaigns this year. The goal is to increase crude production from 140,000 barrels a day to approximately 145,000 barrels a day.
Brown stated during the annual general meeting of the company that "we are focused on revitalizing existing wells and expanding drilling campaigns in order to increase gas volumes."
These developments demonstrate the growing role that local producers play in government reforms. However, they also face challenges.
These operators are facing higher costs because of security issues, community disputes, thefts of oil and aging infrastructure. Addressing these challenges is a crucial part in reducing the costs.
The local players could support the government plan to increase oil production by an additional 1,000,000 barrels per day next year.
According to data from the regulator, they now account for more than half of Nigeria's crude oil production. This is up from 40% when the oil majors finished their divestment programme. Reporting by Isaac Anyaogu, editing by David Evans
(source: Reuters)
