The Nation Newspaper

Tag: oil output

  • Govt urged to increase oil output above 2.2m bpd

    Govt urged to increase oil output above 2.2m bpd

    The Federal Government has been urged to increase crude oil production from the current level of between 2.2millon and 2.3 million barrels per day (bpd).

    The low output has made it difficult for the government to generate enough revenue for socio-economic development, data from the Nigerian National Petroleum Corporation (NNPC) has shown.

    The data showed that the country’s crude production has been less than 2.5mpd, while the global oil downturn persists. It is in view of this development that the Society of Petroleum Engineers (SPE), Nigerian chapter, advised the government to ramp up oil production by engaging in more  drilling and exploration activities.

    Speaking in Lagos during a briefing to herald the 2015 Nigeria Annual International Conference and Exhibition (NAICE), its Country’ Chairman, Emeka Ene said the need to buoy oil production became necessary in order to reduce the impact of global oil recession on Nigeria.

    He said: “There is urgent need by the government to improve daily oil production via drilling more wells. The oil in the Gulf of Guinea holds more prospects for Nigeria. However, the need to optimise the potentials in the nation’s oil and gas industry by drilling more wells would go a long way in boosting production. It is better for Nigeria to drill more oil wells during a down cycle period than a booming period. This is the only way we (Nigeria) can have more to sell and make more money during recession.’’

    According to him, the industry operates in a cycle, stressing that there are upside and downside period in the sector.

    “There was a period when oil was $11 per barrel before the price moved to $40, $50 and over $100 per barrel. Later, the price fell to below $50 per barrel. So, if we increase the volume of oil production, the country would benefit in the long- term no matter the happenings in the international market.

    Ene said activities in Kuwait and other oil producing nations in the United Arab Emirates (UAE) are all time hard, adding that the development made  the country to try   investing billions of dollars in the industry.

    He said while UAE is putting in place measures in place to cushion the effects of the global oil downturn and further improve production.

    He said Nigeria should do something over a long-term period to address problems in the industry.

    Ene said the resuscitation of the industry is necessary in the light of decreasing oil production and revenue, adding that the government has taken steps in this direction.

    On the conference, Ene said NAICE 2015 conference, being the 39th edition, will hold from between August 4 and 6, at the Expo Centre, Eko Hotel and Suites, Victoria Island Lagos. The theme for this year’s conference is “Natural Gas Development and Exploitation in an Emerging Economy – Strategies, Infrastructure and Policy Framework,” he said.

    The main focus of the conference is “Sustainability, Infrastructure and Framework in an emerging economy” with a focus on natural gas development and exploitation, he said, adding that there will be workshops on marginal field, among others.

    Expected to speak at the event are the Vice President,  Prof. Yemi  Osibanjo, SAN,  Lagos State governor, Mr. Akinwunmi Ambode,  Group Managing Director NNPC, Dr. Joseph Thlama Dawha, Mr. Helge Hove Haldorsen, Vice President, Strategy & Portfolio Development & Production, North America, Statoil, Mrs. Elisabeth Proust, Chief Executive Officer, Total Exploration & Production, Nigeria, and Mr. Clay Neff Jr, Chairman & Managing Director, Chevron Nigeria Limited.

  • NPDC and enhanced local participation in oil output

    NPDC and enhanced local participation in oil output

    Antagonising Mrs Diezani Alison-Madueke on the basis of decisions that were made in good faith could only discourage future ministers from making hard decisions where necessary to deal with challenges in the oil and gas sector. GODWIN ANAUGHE writes

    It is true that when progress comes, there is propensity by those who are afraid of change to challenge it. For the past four years that the Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke, has been at the helm of affairs her goal has been to make the oil and gas sector more accessible to local indigenous players. Her work has been plagued with stories which whether real or imagined have not been fully investigated nor do they hold neither facts nor truth.

    This is the price she is paying for daring to remain at the helm of the most important sector of the Nigerian economy and threading in an all men industry and still has the guts to stand tall despite the negative publications against her. And who is to blame if not she, for failing to fight back forcefully enough. The good news, however, is that the criticism has never dissuaded her from doing what she believes is right for our country.

    We do not always have to criticise government officials simply because we do not understand the workings of government. Alison-Madueke, a holder of the MBA of Cambridge University is not all knowing and never will be, but her record shows that she knows what she is doing at the petroleum ministry and her desire to see that the Nigeria oil sector develops to its maximum capacity is not in any doubt. It is this desire that has driven her to adopt several creative previously utilised ways to bridge the existing funding gap in the industry which hitherto has prevented the NNPC from meeting its cash call obligations when due.

    One such financing arrangement is the Strategic Alliance Agreement (SSA), which has made it possible for the Nigerian Petroleum Development Company (NPDC), the exploration and production subsidiary of the Nigerian National Petroleum Corporation (NNPC), to undertake investment in very critical projects in the oil and gas sector.  Similar to Financial and Production Sharing Agreements (FPSA) and Petroleum Sharing contracts (PSC), the SSA has enabled NPDC to develop oil and gas fields which ordinarily it could not have funded from its limited resources or carried all the risks solely. These agreements are based on tested financial models used by international oil companies to help NPDC fund its cash call obligations.

    Without the SSA, many oil and gas fields would not have been explored, developed and produced because NPDC would be unable to meet the cash call obligations in these partnerships with its partners, and as such many vital projects of NPDC would have suffered thereby undermining the Nigerian economy. This is definitely what Nigerians who are not conversant with the oil industry do not know. They also do not know that SSA with NPDC has been entered into with indigenous companies to empower the local companies (under the same terms and conditions like that undertaken with the international oil companies and NNPC). This kind of effort should be lauded, as it is the minister’s goal to develop indigenous companies.

    The SSA is not new in the petroleum and gas industry, as many countries have used this financing instrument to grow their operations. State oil companies such as Petrobas of Brazil, Petronas of Malaysia and Sonangol of Angola have aggressively used these innovative financing arrangements to the benefit of their countries. NPDC cannot be different if we are to remain competitive in the global market.

    The criticism of Mrs Alison-Madueke who, in good faith, has made audacious steps to reposition the oil and gas industry through the adoption of innovative financing instruments to the benefit of the nation are uncalled for.  She deserves commendation and not condemnation.

    We are all aware that the international oil companies have always complained that NNPC is not able to meet its cash call obligations. Therefore to suggest that the SSA be rolled back is to say the least unwise and unpatriotic. It will amount to throwing away the baby with the bath water when the gains of SSA are about to be consolidated. Agreed that flaws may abound in the agreement, but they cannot and should not be blamed on the executive, which has used these already established instruments to ensure the smooth operation of NPDC. Neither can they be attributed to the minister or the government. These flaws manifest at the operational level and whatever challenges that exist in the execution of those agreements, be they legal, commercial or operational, should be handled at the operational level. It is at that level that issues such as those arising from the commercial agreement entered into by NPDC and Atlantic Energy Concepts Limited should be resolved.

    Antagonising Alison-Madueke on the basis of decisions that were made in good faith could only discourage future ministers from making hard decisions where necessary to deal with challenges in the oil and gas sector. Without doubt, Mrs Alison-Madueke is a strong character who is not easily distracted but she needs our support so she can remain focused on the restructuring of the oil and gas industry and most especially the passing of the Petroleum Industry Bill (PIB) that will help stimulate investment in the oil and gas sector.

    The focus, therefore, should be on the PIB which has been held down by the cabal that is fighting the minister. Just as the FOIA was fought and won and the National Health Bill almost sailing through, pressure should be mounted on the National Assembly to pass the PIB. Or are we all forgetting the expected benefits of the PIB to the common man who we all claim to fight for? Fight for PIB and not fight the minister who may out of fear of criticism stop any fresh innovative ideas being brought to the ministry, an act which has rendered some of the sectors of the economy impotent.

    Mrs Alison-Madueke has achieved so much for the oil and gas sector and made many bold decisions since she arrived at the ministry. Let us not forget that under the watch of this able woman, Nigeria increased its daily oil production, eliminated petroleum products scarcity in our nation and restored peace to the Niger Delta. A bigger plus is that NPDC which for years under previous administrations boasted a production output of less than 5,000 barrels per day (bpd), today produces well in excess of 50,000bpd all because of the SSA as well as the operatorship of several oil blocks that were transferred to the NNPC subsidiary.

    The audacious steps she also took led to the Gas Masterplan revolution implementation of Nigerian Oil and Gas Industry Content Act, as well as implementation of the National Gas Supply and Pricing Policy. That NPDC has grown into a medium scale exploration and production company from its small sized era is her feat, just as under her leadership, there has been an increase in the contribution of Nigerian companies to oil production output. What more can we say?

    Rather than join in the bandwagon to pull her down, Nigerians should stick with her and encourage her to continue with the work she is doing for the country.

     

    •Anaughe, a public affairs analyst, wrote from Lagos

  • ‘Oil output may rise to 2.5m bpd’

    ‘Oil output may rise to 2.5m bpd’

    Nigeria’s oil production is set to rise to 2.5 million bopd in the next two weeks as repairs are completed on a major pipeline, a spokeswoman for the Nigerian National Petroleum Corporation, or NNPC, said in a statement.

    “In a fortnight, repair works on the Nembe Creek Trunk Line (NCTL) which has a daily capacity of 150,000 [bopd] is expected to be fully completed. On completion, daily average crude oil production is expected to increase to 2.50 [million bopd]” she said.

    Shell Petroleum Development Company shut the pipeline in April to remove crude oil theft connections and investigate suspected oil theft leaks. The pipeline’s closure caused SPDC to declare force majeure on its exports of Bonny Light crude oil.

    Shell declined to comment on when repairs to the pipeline would be completed.

    Widespread incidences of oil theft and vandalism significantly dented Nigeria’s oil production in the first quarter of the year. According to NNPC, output in the first quarter fluctuated between 2.1 million and 2.3 million bopd, well below the forecast production level of 2.48 million bopd.

    According to Nigeria’s submissions to OPEC, its production this year has been even lower. OPEC figures show Nigeria’s output averaged 1.9 million bopd in the first quarter, and was just 1.7 million bopd in June.

    However, incidences of oil theft have decreased significantly and production volumes have improved since June, thanks to a joint effort by the oil ministry, NNPC and international oil majors operating in the country. The spokeswoman added that the country’s production should increase further to 2.55 million bbl a day of oil and condensate for the rest of the year.

    “All that is required is to continue the fight against pipeline vandalism and crude oil theft to achieve this target,” she said.

  • How Nigeria can raise oil output, by experts

    ANALYSTS have given an insight into how the country can increase its crude oil production from 2.3million to 2.6million barrels per day(bpd).

    According to them, it can be increased through the repair of destroyed oil facilities in the Niger Delta, production from deepwater projects, exploration of new oil wells, creation of infrastructure in oil producing areas, and passage of the Petroleum Industry Bill (PIB) and stability in the fiscal regime.

    The President, Petroleum Technology Association of Nigeria(PETAN) Mr Emeka Eze, and energy expert, Mrs Funmi Akinluyi, said when the government stabilises its fiscal regime programmes, more foreign investments would come to the oil and gas industry.

    Investors, he said, were not interested in oil and gas because they are not sure of the government’s next action and that crude oil production will increase when there more investments in the industry.

    He said the passage of PIB would quicken local content development, adding that the development would lead to improvement of indigenous capacity.

    Eze said: ‘Most Nigerian oil service companies are not well capitalised. Many oil blocks are left untapped because there is no adequate capital. Nigeria should bring more money into the sector and further grow capacity, just as Brazil and Malaysia did 10 years ago. Nigerian oil service companies have no where to go than to stay and help in improving crude oil production in the next few years,’

    Mrs Akinluyi said there should be a long-term stability in the Niger Delta to improve crude oil production.

    She said steady increase in production from two million barrels to as high as 2.6 million bpd in the future is possible if necessary mechanisms are put in place.

    “The long-term stability of the Niger Delta will remain a major factor to consider as we approach the election year, “Nigeria’s production has been plagued by years of attacks on vulnerable pipelines and platforms in the Delta, which increased in intensity from mid-2006, allowing Angola briefly to become the continent’s top crude oil producer.

    “But an amnesty last year brought a halt to sabotage attacks helping push Nigeria’s crude output above two million bpd. Production has risen gradually since the amnesty and has averaged more than 2.1 million bpd so far in the second half of the year, according to Reuters’ data, far eclipsing Angola’s planned production of 1.68 million bpd over the same period. Angola’s crude exports peaked near 1.9 million bpd earlier this year but summer maintenance and production glitches pulled this back to below 1.7 million bpd in the third quarter, according to data collected from trade sources,” she added.

    The Minister of Petroleum, Diezani Alison-Madueke, said the reforms in the PIB would be passed soon, adding that targets for implementing this legislation have been repeatedly missed.