Tuesday, May 24, 2011

Crude Oil: Nigerian Indigenous Operators Target 400,000bpd


Crude oil production by private indigenous oil companies in Nigeria will hit 400,000 barrels per day in the next three years, from the current level of about 80,000barrels per day, Chief Executive Officer of Seplat Petroleum Development Company Limited, Mr. Austin Avuru , has said.

Speaking at an investors’ forum in Lagos, Avuru attributed the anticipated growth in indigenous production to the current release of oil blocks to the local companies by Shell Petroleum Development Company (SPDC) Limited.

Local operators account for only about three per cent or 80,000 barrels per day of the 2.6million barrels per day of crude oil production in the country.

“We have spent 20 years of indigenous capacity building and only achieved 80,000barrels per day but with Shell’s current transactions, indigenous production will hit 400,000 barrels per day in the next three years,” he said.

Avuru’s company, Seplat Petroleum Company Limited, an indigenous consortium jointly formed by two Nigerian firms - Platform Petroleum Limited, and Shebah Petroleum Development Company Ltd, along with Maurel & Prom of France had acquired Shell’s three oil blocks in 2010.

The consortium also bought Total Exploration &Production Nigeria Limited’s 10per cent stake; and Nigeria Agip Oil Company’s 5per cent interest in the three licenses – Oil Mining Licenses (OML) 4, 38 and 41, which Avuru said was currently producing 36,000barrels per day.

Avuru stated that apart from the three blocks acquired by his company, Shell was also offering five additional blocks to the local companies.

“OMLs 26, 30, 34, 40 and 42 are being sold now,” he said.

He stated that as part of the strategy to ensure that crude oil production was not disrupted due to the change of ownership of the three blocks, his company inherited 27 workers, who disengaged from Shell on August 1, 2010, after the parties got ministerial consent to close the deal on July 31, 2010.

Seplat commenced formal discussions with Shell on the acquisition of the 45 per cent stake in June 2009, while the parties signed the agreement on January 29, 2010.

On January 29, 2010, SPDC agreed to transfer its interest in three production licences and related equipment in the Niger Delta to a consortium led by two Nigerian companies.

“This sale of assets supports the Nigerian government’s goal of expanding opportunities for local energy companies. We have been in Nigeria for more than 50 years and remain committed to doing business here. This transaction should be seen in the context of Shell’s active portfolio management of its assets and interests across the world,” said Mutiu Sunmonu, Managing Director of SPDC.

The agreement, which covers Shell’s 30per cent interest in oil mining leases 4, 38 and 41 covering approximately 2,650 square kilometres in the north western Niger Delta, later included the 15 per cent interest held by Total and Agip.

SPDC was the operator of the joint venture between NNPC (55 percent), Shell (30percent), Total E&P Nigeria Limited (10 percent), and Nigeria Agip Oil Company (5percent). Total E&P Nigeria Ltd and Nigeria Agip Oil Company will also transfer their interest in the three oil mining leases.

The area includes about 30 wells with a production capacity of approximately 50,000 barrels of oil equivalent per day.

The wells also produce natural gas for domestic and industrial use. Crude production is currently shut down awaiting completion of repairs to an export pipeline damaged in late 2008.

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