Despite a change in government, and hopes for an improvement to the country’s ability to attract investment, Nigeria’s hopes to increase production remain slim.
Wood Mackenzie head of West Africa upstream Content Mansur Mohammed noted that Shell, ExxonMobil and Eni were all in the process of selling down Nigerian assets.
Seplat Petroleum’s agreement to buy Exxon’s onshore and shallow-water projects is seen as a particular point of contention.
“The new president was expected to approve the Seplat transaction and pave the way for many of these deals to complete,” Mohammed said on a webinar. “However, we’re six months in and the issue remains unresolved and these deals are still pending.”
Failure to approve these transactions “will deter much need investment, which is impacting production growth. Combined, these three transactions when complete will represent fundamental shift in the majors’ ownership in Nigeria, having spent many decades dominating onshore production. We think more deals are likely as the majors re-evaluate their global portfolios.”
Mohammed explained that, while these onshore deals are in limbo, the current operators will not invest in major new developments.
Theft pressures
Since 2020, he noted, Qua Iboe production has declined by 37%, from 230,000 barrels per day to 146,000 bpd. There remains scope for more output from the assets, with 40 undeveloped fields and 3.8 billion barrels of oil equivalent in remaining resources. There is also scope for floating LNG.
A proposed $1.9 billion facilities revamp, and satellite development, are on hold until the deal is complete, WoodMac said.
Indeed, the only terminal in Nigeria that has been largely impervious to theft has been Qua Iboe. This, the WoodMac expert said, was because the pipeline system for this facility was almost entirely offshore.
Earlier this week, Nigerian National Petroleum Corp. (NNPC) and Aiteo E&P launched a new crude, Nembe. This involved the export of oil through a new FSO, installed as an alternative to the Nembe Creek Trunk Line (NCTL), which Mohammed said had become “notorious for theft”.
Major exit
The IOCs have been selling down old assets in Nigeria, while Africa-focused independents and indigenous players have been acquiring. While this shift will see more production held locally, it also requires more investment from smaller companies.
Onshore problems, largely around theft and insecurity, have driven the majors to want to sell down these assets.
Instead, they have focused on the deepwater, where security is more straightforward. While they have maintained existing deepwater projects, there appears little enthusiasm for new plans.
There has been no major offshore project progress since 2013 in Nigeria, when TotalEnergies approved the Egina project. At the rate the country is going, if new projects do start up, they will do little more than slow Nigeria’s rate of decline, rather than add growth, Mohammed said.
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