ALLAFRICA.COM
DAILY TRUST [24/02/13]
By Mohammed Shosanya
Lagos — The agenda of successive governments in the country is to explore ways of increasing the country's oil production and its reserves to 40billion barrels few years from now.
Nigeria's current daily production hovers between 2.5million and 2.6million barrels.
This development came on the heels of the shrinking production which has not brought expected value addition to the revenue of government and the lives of people in Nigeria.
Last year, the country lost 500,000 barrels of oil to the flood which swept major parts of the country.
A recent report of ExxonMobil said the nation's oil production has remained stagnant in the last 40 years and that its new deepwater production has not buoyed its oil production during the period under review.
It said in the mid 1970's, Nigeria's oil production reached a high of 2.2 million barrels per day, mainly from onshore and shallow water fields.
The multinational oil company attributed the nation's stagnant oil production to delays in project approvals, restrictions in NNPC funding and tortuous contract award process which have slowed overall reserve replacement and put pressure on long-term production and growth.
Observers are of the opinion that Nigeria needs to gird its loin in its quest to grow production due to fierce competition among other African countries whose oil fortunes are also growing.
They said the country can exploit the marginal oil fields to raise Nigeria's oil production into enviable heights.
Marginal fields are oil discoveries whose production, for whatever reason(s) fail to match the desired or established rates-of-return of the leaseholder.
They are the small and abandoned fields, which have remained undeveloped by the International Oil Companies (IOCs) because such fields contain reserves that are uneconomic when produced by the multinationals.
They are however profitable if operated by indigenous producers, due to their low overhead and operating costs.
The Nigeria Petroleum Act of 1969 with its amendments prior to Decree 23 of August 1996, restricted access by non-discoverers/owners to undeveloped or marginal fields which defeat the potential of significant contributions by small and/or third party operators to national production capacity.
The recent amendment to the 1969 Petroleum Act, Decree No 23, now guarantees access to marginal fields through, re-allocation of fields by the MPR, subcontracts and farm-in/farm-out arrangements made directly with a leaseholder, relinquishment (partial or total) of acreage by lease-holder and subsequent re-allocation via the MPR, Acreage swap by discretion of the ministry and Department of Petroleum Resources (DPR).
A total of 116 of such fields with collective reserves of about 1.3 billion barrels was identified by the federal Government after a study that ended in December 2000.
Today, there are about 251 marginal fields in Nigeria with an estimated 2.3 billion barrels of proven recoverable oil reserves.
Marginal oil fields in the Niger Delta Basin are scattered in the oil producing states in the Niger Delta Area.
These areas are: Edo, Ondo, Delta, Bayelsa, Rivers, Akwa Ibom, Cross River, Imo and Abia States.
According to statistics from the Centre for Petroleum Information (CPI), an average reserve stands at 11 million barrels, with 91 smallest fields having reserves averaging 5.4 million barrels, 20 medium fields averaging 24.7 million barrels and the largest five, 58 million barrels.
Eleven years ago, the federal government embarked upon the licensing of operators for 24 marginal oil fields containing about 300 million barrels of crude oil as part of its Marginal Field Development Programme, aimed at raising indigenous participation in the strategic upstream sector of the oil industry.
The programme was also aimed at increasing production, oil and gas reserves as well as generating employment in the country.
In 2003, twenty-four marginal fields were awarded to 31 Nigerian companies, over which 60 percent of these fields are said to be onshore; over 70 percent of these fields face-funding challenges and will welcome investment via debt, equity or a combination thereof either domestic or foreign.
Sadly, about seven companies out of 24 that were awarded the fields, have been able to bring same into production hitherto.
They are: Brittania-U's Ajapa field, Energia's Obodeti/Obudugwa field, Midwestern's Umusadege field, Pillar Oil's Umusati/Igboku field, Platform's Asuokpu/Umutu field, and Walter smith's Ibigwe field.
Observers bemoaned the situation, saying the development defeats the country's desire to grow oil production and maintain viable oil and gas industry They said marginal field operators in the country are affected by factors such as funding and encumbered economic environment.
Former Special Adviser to the President on Petroleum Matters, Dr. Emmanuel Egbogah said lack of funding at local and international levels, high interest rates, stringent conditions prior to funding approval, cost of laying pipelines, are hindrances to marginal field development in the country.
Other challenges of marginal field development include low reserves and productivity, absence of nearby facility or infrastructure and low-medium local human capacity available.
No comments:
Post a Comment