Don't Miss


Home   >   Business   >   Industries   >   Energy   >   FG to make N474bn from deep-water projects

FG to make N474bn from deep-water projects

By on May 26, 2013

The developmment of deepwater assets in the Nigerian oil and gas can contribute $3bn (N474bn) to the country’s economy. It can also generate about 200,000 jobs annually.

The Commercial Manager, Shell Nigeria Exploration and Production Company Limited, Mr. Stefan Vas de Wael, said this during a recent training session for energy journalists in Lagos.

Currently, deep-water oil fields in the country include Abo, Erha, Bonga, Usan, Agbami and Akpo while undeveloped deepwater potential abound.

Details of the prospect obtained on Friday showed McKinsey Multiplier Model as the source of the information.

Vas de Wael said the undeveloped deep-water assets  could add over 600,000 barrels per day of oil, which would amount to doubling the current deep water liquids from deep-water fields in the country.

He said over $5bn (N790bn) would be required annually to develop and produce five million barrels of oil per day.

Vos de Wael, said,  “If all the deep-water assets in Nigeria  are developed, they  could generate 200,000 plus jobs, $3bn in GDP and 600, 000 barrels oil per day. This is according to McKinsey Multiplier Model.

“Developing 200,000 jobs is equivalent to growing the oil and gas industry by 30 per cent. $3bn GDP will amount to additional 15 per net of projected GDP growth rate.

“The 600,000 barrels per day will amount to doubling current deep water liquids production. Annual spend of $5bn plus to develop and produce 5 million barrels of oil per day.”

Speaking on the challenges facing deepwater projects in the country, the Commercial Integration and Business Value Manager, SNEPCO, Mr. Taaj Shobayo, said deepwater exploration and production was expensive, complex and risky with long cycle times.

According to him, current offshore projects take 10-20 years from licence award to production.

He said, “Deep-water exploration and production is expensive, complex and risky with long cycle times. Current offshore projects take 10-20 years from license award to production. A typical well in a deep water cost about $150m and you will be spending another $500m for further appraisal.

“And when the project is not good enough, all this money will be lost. Because of the financial outlay and the technology involved, only few operators play in the deep water space.”

Shobayo explained that if the fiscal terms of the Petroleum Industry Bill were not favourable, it meant all the deep-water projects would not go forward.

Highlighting  the cost intensive nature of deep water projects, Shobayo said a huge amount of money expended between exploration and production.

Speaking in similar vein, the Managing Director, Shell Nigerian Exploration and Production Company, Mr. Chike Onyejekwe, said the Nigerian deep-water fields have attracted about $48bn Foreign Direct Investments since 1993.

The SNEPCO boss said the investments came  through deep-water projects such as Abo (Agip), Erha (Mobil), Bonga (Shell), Usan (Total), Agbami(Chevron) and Akpo oil fields.

He said the investment was a pointer to the enormous opportunities presented by deepwater fields, especially in growing Nigeria’s economy.

The fields, according to Onyejekwe, have delivered over 0.8 billion barrels up to 2012.

The SNEPCO boss further said the  international  oil companies would invest about $165bn  in the Nigerian oil and gas industry in the next five years, which is twice the value of the Nigerian Stock Exchange.

He further stated that Shell had recorded tremendous success in its Bonga deepwater oil field, saying as at December 2012, it had exported about 450 million barrels of crude oil. In the same year, Shell produced about 33 per cent of Nigeria’s oil production.

 

 

 

 

[Punch]