PIA: IOCs plan $60 bn FID on 6 deepwater projects

Sopuruchi Onwuka

International oil companies that hold substantial reserves in the Nigerian deepwater basin will ink landmark final investment decisions (FIDs) on six offshore oil and gas developments by next year, ending over 12 years of activity lull in the prolific terrain.

The Oracle Today reports that the deep offshore field development projects in calculation are operated by TotalEnergies, ExxonMobil, Shell and Chevron who are expected to stake significant investments in harnessing the reserves for market supply.

Group General Manager (GGM) in charge of the National Petroleum Investment Management Services (NAPIMS), Engr Bala Wunti, declared at the ongoing Practical Nigerian Content (PNC) Forum in Yenegoa, Bayelsa State, that the field development projects would not only arrest Nigeria’s sagging oil production volumes but also form the key enablers for the implementation of the new Petroleum Industry Act (PIA) 2021.

The PNC Forum is the signature policy debate platform initiated and driven by the Nigerian Content Development and Monitoring Board (NCDMB) to chart clear direction for implementation of petroleum industry programmes in order to create significant benefits for the domestic economy.

Engr Wunti who participated in industry leaders’ panel session at the conference was specific that the FIDs would happen in 2022.

Although he did not provide the budget for the expected investments, other industry sources including multinational consultants had earlier provided cost templates which modeled the projects for combined capital outlay of over $60 billion or N27 trillion.

Engr Wunti explained that clarity of roles in the regulatory environment, fiscal certainty in the operating environment and smooth resolution of contractual disputes in the PIA have sufficiently addressed uncertainties that discouraged investors from staking funds in Nigerian projects during the period the disputed Petroleum Industry Bill (PIB) suffered legislative impasse.

He declared that Agbami field gas development project, Bonga North, Bonga Southwest/Aparo, Owowo field development, Bosi field development, and Porowei field development projects which were suspended by the operators following concerns around uncertainties in the fiscal, regulatory and operating environment would now reach FID in 2022.

Our records on the named projects show that all the projects had earlier been approved by the defunct Department of Petroleum Resources (DPR) which is now transformed into National Upstream Regulatory Commission (NURC). All the projects approved in the deepwater development programme, including others not mentioned by Engr Wunti, have missed their delivery deadlines due to issues associated with former PIB.

The deepwater development projects were captured under the prime national aspiration to build Nigeria’s oil production capacity to 4.0 million barrels per day from projected reserves base of 40 billion barrels of hydrocarbon liquids. Both targets have remained unmet due to low investment by the major international oil companies protesting fiscal propositions in the defunct PIB.

The Bonga Southwest/Aparo (BSWA) field is operated by Shell in collaboration with Stardeep, the deepwater business arm of Chevron in Nigeria. And both firms would now jointly finance the field development programme expected to deliver some 225,000 barrels per day of crude oil.

The 630 million barrel BSWA development which comes with a budget of about $12 billion or N5.4 trillion captures subsea facilities; risers; floating production, storage and offtake (FPSO) vessel; and single point mooring buoy (SBM).

The  Shell operated Bonga North field located northwards of Bonga Main in oil mining lease (OML) 118 is estimated produce 100,000 barrels per day and development budget is estimated to hover around $10 billion or N4.5 trillion if a separate floater would be required. The budget falls by half in the event that production is tied back via subsea flowlines to the 16 year old Bonga Main FPSO.

The Porewei field located in TotalEnergies operated OML 130 is designed to be tied back to the Akpo FPSO given its 145 million barrel reserves size and expected output. However it still carries estimated development budget of about $5.0 billion or N1.8 trillion, according to deepwater cost templates available to our correspondent.

The Bosi field in OML 133 is operated by ExxonMobil promises an output of about 140,000 barrels per day; and the FID is expected to come with a development budget of some $10 billion or N3.6 trillion including the use of an FPSO.

Unclear development plan and possibility of unitized development makes budget blurred for Owowo field until both TotaloEnergies and ExxonMobil work out project details for the reserves which straddles fields separately operated by the two companies.

However, reserves size and templates from peer projects suggest production profile of 200,000 barrels per day and a budget of about $12 billion or N5.4 trillion.

Data on Agbami gas development were not immediately available at the time of our report, but an industry expert suggests that development of gas fields might entail considerations for production of liquids like condensate, and additional investments in gas export from production site to onshore facilities.

Executive Secretary of the Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, declared in the agency’s 10 year plan that the upstream petroleum industry invests annual $20 billion, explaining that the agency’s 10 year plan would be realized on the upstream activity budget.

He expressed hope that more projects would come online now that the disputed original proposals in the PIB have been toppled by an acceptable PIA. He made it clear that projects are critical to realization of all economic and commercial goals provided in the new industry law.

In his industry address, the Country Chair of Shell Companies in Nigeria (SCiN) and Managing Director of Shell Petroleum Development Company Limited, Mr Osagie Okunbor, said the PIA has provided to strong motive needed for players to take investment decisions.

He pointed out that the PIA has also provided the opportunity for Nigeria to produce as much petroleum as it can under the prevailing energy transition, adding that history of field development projects in Nigeria has shown increasing levels of Nigerian Content performance by the leading multinational players.