Nigeria forecasts $60 billion investments in oil, gas sector
By Taiwo Hassan
IN what may position up the nation's hydrocarbon industry as a force to be reckoned with in the global oil market, Nigeria is expecting an over $60 billion of oil and gas investments across a variety of operations through to 2008 and more thereafter, Mr. Fisoye Delano, managing director of the Nigerian Petroleum Development Company Limited (NPDC) Limited, disclosed this recently at the Offshore Technology Conference (OTC) in Houston, United States (U.S.).
The country, which is estimated to hold 70 per cent of the remaining reserves to be discovered in the Gulf of Guinea, is eager for investors to help develop its domestic gas infrastructure, Delano stressed at an industry breakfast.
Nigeria's gas demand is expected to grow from one bcfd in 2006 to over 10 bcfd by 2010 driven by power generation and industrial development.
The government wants investors to develop gas pipeline infrastructure connecting the south of the country to the north and constructing an interconnector between the east and west grid. "We want gas processing plants, at least three to four, to support growth," Delano said. "These plants will be able to strip NGLs."
He said the government has put together an attractive package of incentives to attract investors.
On the government's plans to meet its zero-gas-flaring target in 2008, Delano added that the country currently flared 32 per cent of its gas coupled with the established number of projects to harness gas that otherwise would be flared, such as Nigeria Liquefied Natural Gas and the West African Gas Pipeline, the latter commissioned April 28, Delano noted.
"Nigeria wants to grow its oil reserves to 40 billion bbl by 2010 and production capacity to 4.5 million b/d by 2010. We want our gas revenue to match crude oil revenue. The President has stressed that GDP (Gross Domestic Product) growth is linked to oil," he said. Over two million b/d of additional production from offshore concessions in 2006-2011 is planned.
Deepwater exploration is the next major area of growth for Nigeria, which has had over seven billion bbl of discoveries so far.
However, Susan Farrell, senior director of Corporate Advisory Services at PFC Energy, raised questions about whether deepwater exploration and production is on a cycle or has reached its peak.
"As new discovery sizes fall and companies develop their portfolios faster than they find new fields, there is a predictable peak to current investment and production growth cycle from 2010-2014," she said.
Farrell said the geological potential of Nigeria is very promising with significant upside, but added that political risk will limit onshore/shallow prospects. "The political issues are the problem," she said. "Nigeria has 500,000 b/d of oil shut-in, and we think it will stay off-line until the end of the year." According to PFC's analysis, there is a small window of opportunity to bring it back onstream because of the rainy season and the time needed to repair infrastructure and restart operations.
Delano assured delegates that the government is working to engage the Niger Delta communities and share value from the oil and gas developments in their areas. "We want to install the appropriate infrastructure to stimulate economic growth," he said.
The Niger Delta only receives a 13 per cent share of the wealth generated from oil and gas in their region. Militants from the Niger Delta are pressing for 50 per cent of the proceeds while the government has proposed 18 per cent. The key question is whether the parties can agree a compromise and if so, when.
