Nigerian Deepwater Oilfields to Generate $66bn Investments
Multinational oil and gas-producing companies in Nigeria, under the aegis of Oil Producers’ Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI) have stated that deepwater oilfields had the potential to generate $66 billion of investments for the country.
Shell, ExxonMobil, Chevron and Total, said the deepwater would also contribute additional 900,000 barrels of oil equivalent per day to the country’s output in 2020 to offset natural decline in production.
The oil majors also added that deepwater has broader impact on the Nigerian economy through the growth of Gross Domestic Product (GDP) and job creation.
The multinational oil firms, which also stated that deepwater production had contributed significantly to the country’s oil growth strategy, accounting for 40 per cent of liquids production, however, expressed concern that the fiscal terms in the current Petroleum Industry Bill (PIB) would put the deepwater potentials at risk.
They said with world-class projects worth over $40 billion in investments, deepwater was delivering 900,000 barrels of crude oil into the country’s daily output as at 2012.
Citing data by Rystad Energy, the oil firms said deepwater had compensated for the decline in onshore oil production. While restating their opposition to certain provisions of the PIB, the oil companies argued that the fiscal terms in the proposed reform bill are harsher than the current fiscal regime and the rest of the world.
According to the document, the fiscal terms proposed by the PIB will make all planned deepwater projects non-viable, resulting in quick decline of deepwater production. It also disclosed that several non-fiscal issues such as lease terms and contract sanctity would create uncertainty and affect global competitiveness of deepwater projects in Nigeria.
Nigeria currently has five deepwater oil fields – Shell’s Bonga; ExxonMobil’s Erha; Total’s Akpo and Usan; and Chevron’s Agbami. But the operating companies said deepwater projects were technically and financially more challenging compared to onshore projects.
With $15 million, an operator could drill an onshore well, while a deepwater well cost $100 million, the oil companies argued. They also noted that while less risky conventional technology was used in onshore production, deepwater used more risky complex technology.
According to them, the government contributes between 55 to 60 per cent of investments in the onshore production; while the oil companies provide 100 per cent of funds for deepwater investments.