Nigeria Content Online

Investments
in projects to boost deepwater oil production in West Africa have grown
by more than 10 fold in the last decade, from about $1.5 billion in
2000 to the current level of about $15.6 billion (N2.34 trillion).

Oil
industry operators noted yesterday at the opening of the 3rd Regional
Deepwater Offshore Conference and exhibition organised by the Nigerian
Association of Petroleum Explorationists (NAPE) in Abuja that the
significant growth exceeds the combined investments for onshore and
continental shelf areas.

Mark
Ward, chairman/managing director, Mobil Producing Nigeria, said the
level is expected to climb even further, with ongoing new deepwater
projects being developed in Nigeria, Angola, and Ghana.

Mr.
Ward, however, bemoan the high cost of executing deepwater projects,
pointing out that the declining oil prices significantly contrasts with
the limited local construction capability, which, he said, has been
identified as a major feature of the high cost profile of deepwater
projects in West Africa.

With
over 25 billion of oil equivalent barrels discovered in deepwater West
Africa since the early 1990s, Nigeria and Angola, the ExxonMobil boss
said, have achieved the biggest exploration success, with discoveries
in fields like Erha, Bonga, Bosi, and Agbami in Nigeria, and Girassol,
Dalia, Kissange, and Kizomba in Angola.

In
spite of increasing discoveries and basin maturity, he said discovery
size and reserve per well has decreased, with average discovery for all
of West Africa reducing significantly between 2000 and 2004 when
compared with the level before 2000.

“Since
2005, the average discovery size trend for West Africa has increased,
while average Nigeria discovery size has continued to decrease,” he
said, adding that the trend goes with increase in operational cost,
with unit capital cost for projects put at about 50 percent higher than
unit capital cost of existing fields.

Operating cost is essential

He
underlined the need for fiscal terms to take into consideration the
unique attributes of fields and the high cost of operating them. Mr.
Ward said this was the only way to avoid deepwater oil discoveries from
being stranded.

He
listed other facilitators to include technology, stable fiscal terms,
as well as balancing Nigerian Content Development initiative with
efficient project development processes, arguing that “while Nigerian
Content Development is important, it needs to be paced, realistic, and
collaborative,” as imposition could stifle both the total in-country
projects and pace of project development.

Diezani
Alison-Madueke, petroleum resources minister, acknowledged deepwater as
a critical frontier for the West African region and Nigeria in
particular, when the country’s aspiration is to increase its oil
production capacity and national reserves, saying this has informed
government’s focus on the development of the country’s deepwater assets.

“Despite
the recent exploration decline, Nigeria has done an aggressive work to
ensure that going torwards the fiscal terms for Nigeria’s deepwater
assets are attractive enough to enable progressive growth in the next
couple of years.

“The
Petroleum Industry Bill (PIB), which encompasses the fiscal regimes for
deep offshore production sharing contracts (PSCs), is currently being
debated in the National Assembly, to ensure that by the time it is
promulgated into law, the interest of all would have been
accommodated,” Mrs. Alison-Madueke said.

The theme of the conference, co-hosted by the American Association
of Petroleum Geologists (AAPG), was: ‘West Africa Deepwater: Successes,
Challenges and Future Prospects.’