Nigerian investment in deep offshore oil to hit $ 5 bn by 2005

Mar 18, 2004 01:00 AM

The Federal Government has disclosed that investment in Nigeria's deep offshore oil sector will hit $ 5 bn (about N 715 bn) by 2005, rising from $ 2 bn (about N 286 bn) in 2001. It is also expected that crude oil production from Offshore West Africa (OWA) will increase to 6.2 mm bpd by 2006. OWA countries include, Nigeria Angola, Cameroon and Equatorial Guinea.
President Olusegun Obasanjo made the disclosure in a keynote address presented at the opening ceremony of the offshore West Africa (OWA) conference and exhibition, which commenced in Abuja.

The president who was represented by the presidential adviser on petroleum, Dr Edmund Daukoru disclosed that government was totally committed to providing an enabling environment for investment to flourish in Nigeria's deep offshore.
"In the Nigerian sector of the deep water, fields such as Bonga, Erha, Agbami, Akpo and Abo are already on initial production or will shortly be so, and are expected to boost our national production capacity to around 4.1 mm bpd by 2010," he said.

He disclosed that ambitious projects are in the offing with the full backing of the administration to capitalize on existing gas opportunities as well as the new deepwater discoveries.
“They are the Nwa-Doro LNG, Brass LNG and the Nigeria LNG trains 5 and 6, the Escravos gas to liquid (GTL) project and the West Africa Gas Pipeline," he pointed out. On the shift in date for first gas from WAGP, he disclosed that because it involves other countries, not all of them are in the same financial situation.”

"Multinational budgets have to show flexibility in terms of timing and in terms of milestones. Ghana is trying to source for funds from their own resources and from the World Bank, Togo is also struggling for funds, so we have to show realism. But that is not the only issue. The World Bank has raised issues of community problems.”
“Where other countries depend on supplies, there must be security of that supply. If because of community problem within the Nigerian territory gas facilities were shut down, then you would have disappointed your customers at the end of the pipeline. So all of these issues are being looked at," he disclosed.

On local content, he said that government has taken several steps towards the domiciliation of the benefits of deepwater activities in the country, including the award of offshore blocks to indigenous companies as well as the offer of 24 marginal oil fields to 31 Nigerian companies. He challenged indigenous operators to take advantage of the efforts of the federal government to increase their stakes in the industry, which according to him, would be more beneficial if locals take over the commanding heights in the oil industry.
Dr Daukoru disclosed that three private refineries have received technically clearance by the evaluation team to begin construction work at their sites and that these were awaiting approval from the office of the President. According to him, the companies had to be approved by the president before they could be announced. The presidential adviser was optimistic that the 50 % local refining of the nation's products demand by year 2006 was feasible, particularly with the current level of interests by private refiners.

Also speaking, group-managing director of the Nigerian National petroleum Corporation, Funsho Kupolokun disclosed that OWA accounts for 20 % of proven global offshore reserves. The NNPC helmsman said that Nigeria alone accounts for 46 % of the OWA proven reserves, while Angola accounts for 39 %.
"The same OWA reserves are predicted to have a potential to reach 40 bn barrels by 2010. There is certainly a lot of undiscovered reserves to be excited about.” While noting that the current deepwater capital expenditure in the OWA region is about $ 10 bn annually, he said that the region is reputed to have the fastest growing rate of discoveries of new reserves worldwide.

Source: Vanguard Media Ltd.
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