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Deepwater projects may be cancelled – NNPC

By on January 22, 2015

With the steep decline in global oil prices, several deepwater projects in the country face delays or outright cancellation, the Nigerian National Petroleum Corporation has said.

The global benchmark Brent crude, which peaked at $115 per barrel in June 2014, traded around $48 per barrel on Tuesday.

The Group Managing Director, NNPC, Dr. Joseph Darwa, said the challenge for the country’s oil and gas industry was how to manage major projects through both price and fiscal uncertainties.

Darwa, who stated this at the 19th edition of Offshore West Africa in Lagos on Tuesday, was represented by the Group General Manager, National Petroleum Investment Management Services, Mr. Jonathan Okehs.

He explained that in the past, especially in 1986, 1998 and 2008, Nigeria had always responded with innovation and the right balance of incentives as the oil and gas industry was important to the overall economic outlook of the country.

The NNPC boss, who noted that the current slide in oil prices was caused by a combination of factors, including lower than expected demand growth, continued strong supply growth and unexpected loss of OPEC discipline, said the factors portended significant implications for the industry.

“A number of deepwater projects may suffer delays or cancellation, including one in Angola, three in Nigeria and one in Ghana; while in shallow waters, two projects in Angola, one in Nigeria and two in Ghana may suffer delays,” Darwa said.

The Managing Director and Chief Executive Officer, Upstream Companies of Total in Nigeria, Mrs. Elisabeth Proust, said with the rapidly falling oil prices, the decision to invest in large projects after discovery and appraisal would be scrutinised more by stakeholders.

She further said the decision would also depend on investors’ confidence in the stability of the contractual and fiscal terms and the perception that the country would respect the terms during the duration of the contracts.

“With this in mind, any petroleum law should seek to encourage investment and to grow production, and needs to be a robust investment vehicle that works during both good and not so good times,” Proust said.

 

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