Nigeria Woos Foreign Oil Operations As Conference Ends
BY ABRAHAM OGBODO, STAVANGER, NORWAY
THE 16th edition of the offshore Northern Seas (ONS) Conference and Exhibition ended on Friday in Stavanger, Norway with a promise by Nigeria to offer even greater opportunities for North sea oil operators who wish to expand their investments in Nigeria deep waters.
Leader of the Nigerian team to the conference, Dr. Edmund Daukoru, presidential adviser on petroleum and energy matters made this promise on behalf of the Nigerian government. He commended the organisers saying that the conference came at the time when the global oil and gas market was facing very severe challenges as a result of the upward spiral of crude prices. He said the international oil market situation was such that the price determining instruments are getting more and more out of the control of oil exporting nations of which Nigeria is one.
Daukoru said Nigeria's deep offshore exploration which started about 15 years ago extends from 200m to over 3, 000m water depth and that by 1993 when the first generation Production Sharing Contracts (PSCs) were signed, 12 oil blocks had been delineated and acquired by oil operators in Nigeria.
He added that new discoveries had been made since the first generation pscs were signed. These include Bonga with estimated reserve of 1.2 billion barrels, Erha 600 million barrels, Abo 500 million barrels, Akpo 800 million barrels, and Agbami one billion barrels.
Even at that, the special adviser maintained that the quoted reserves represent a paltry 25 percent of the country's estimate total deep water reserve of about 33 billion barrels.
He assured operators that the Nigerian government would open fresh bidding for the deep water deposits either by the end of this year or early 2005. In fact a total of 27 blocks with an average size per block of 2, 400 square kilometres in water depth of 2,000 - 3,000 metres, according to him have been marked out for grabs. He even said that any delay in striking oil by prospective operators in these blocks would not be due to an unfavourable geology but the extreme engineering and technology that deep water operations entail.
The adviser also hinted on the enormous gas potentials of the country even as he lamented the copious bias of the operators against gas development in Nigeria. He said, "gas monetisation had been a slow and painful experience for Nigeria, stretching over many years of lost opportunity." He added that the neglect had been so pervasive that even the supply to thermal power plants was through pressure non- associated gas wells until recent years - while associated gas continued to be flared.
Loss due to gas flaring which is currently put at one billion scf (Standard Cubic Feet) per day amounts to a staggering $2.5 billion a year according to the adviser. He said although Nigeria's currently booked gas reserves of 166 tcf (trillion cubit feet) may seem enormous, these estimates represent only 25 per cent of what experts believe to be the country's true potential put at 660 tcfs. Said he; "this huge disparity between actual and expectation is in itself the result of many years of bias against gas, where presumed gas-prone prospects were actively left untested."
Consequently, invitation was also extended to operators, who wish to tap into the Nigeria's enormous gas reserves. The adviser said with the NLNG and other associated gas development projects in place, the world of gas in Nigerian is changing. He even hinted of a gas regulation policy which will, in the long run, ensure that the country derive as much revenue from gas as from oil by 2010 and also spell an end to the practice of using oil revenue to subside gas development.
The gas development drive he said would take a panoramic approach so that deep offshore reserves put at between 80 tcf and 330 tcf could be equally harnessed.
Dr. Daukoru promised would-be investors that the Nigerian government would through a consistent policy of transparency and efficient management of oil resources, create even a better, environment for investors in Nigeria. He, however, charged the oil companies to be more committed to the issue of local content especially the upstream operators as well as exhibit greater transparency in the PSCs they go into with government.
The ONS conference and exhibition which holds bi-annually in Norway or Uk brings together oil companies involved in offshore operations globally for review of strategies and new trends in the oil business. Over a thousand companies engaged in major or auxiliary oil operations took stands at the just concluded exhibition. This year's show was declared opened on August 24 by Norway's monarch, king Harald who incidentally opened the first edition in 1974 as the Norwegian crowned prince.
The managing director of Statoil, Norwegian state-owned oil company operating in Nigeria, Mr. Erik Syrstad said "this year's conference, I think, met the expectations of the organisers."
INTSOK, a mainly Norwegian government funded oil trust was involved in organising this year's conference. Willy Olsen, former managing director of Statoil but now special adviser to the trust said INTSOK "aims to externalise Norwegian oil interest through good partnership with host governments."
Already, the trust has done extensive work in the area of local content in the Nigeria oil business. INTSOK, according to Moses Kragha, a Nigerian consultant to the trust who was also at the ONS conference, " only hopes to partner with Nigerian in the area of fabrication, training and capacity building by the time the idea of local content becomes fully established."
