‘Nigeria’s Oil/ Gas: Future Rests On Independents’

THE  future of the Nigerian oil and gas industry is closely tied to the emergence and continuing growth of Nigerian independents. This assertion was made by Dr. ABC Orjiako, Chairman of Seplat Petroleum Development Company, at the PWC Oil and Gas leadership conference held in Accra, Ghana.

  The indigenous oil investor spoke alongside other prominent Nigerian speakers like Mutiu Sunmonu of Shell, Chima Ibeneche, former managing director of the Nigeria NLNG as well as Ernest Nwapa of the Nigerian Local Content Monitoring Board. According to them, at current production levels, the “25 Indigenous oil companies contribute about 10 percent of Nigeria’s total oil production of 2.5 million bpd.”

   Orjiako added that, “in the Next five years, indigenous companies would contribute 20 percent of the nation’s oil and 40 percent of domestic gas supply. They are likely to be responsible for 100 percent supply for domestic refining by 2020.”

   According to him, these figures point not just to the significance of the indigenous E&P players but their rising profile and need to pay more attention to their activities.

    Tracing a historical trajectory, Orjiako noted that Nigerian independents, distinguished by their not being International Oil Companies (IOC) or National Oil Companies (NOCs), came into the picture first via discretionary Awards of acreages in the 1990s.

    The Seplat boss, however, noted that, since 2003, government has pursued a fresh policy, one that is geared towards preferential access in the bid for new acreage. According to him “Since 2003, the government has favoured the allocation of acreage to indigenous companies during the bid rounds. The Nigerian Content Act (2010) also specifies that Nigerian independent operators be given first consideration in the award of oil blocks.”

    nother critical factor in the emergence of Nigerian independents, according to Orjiako, was the “Marginal field development programme which ensured that fields left fallow by the IOCs are farmed out to indigenous E&P companies, who are then granted  preferential  fiscal incentives.”

      Explaining further, Orjiako told his audience that “24 “marginal” licences were awarded in 2002 and a number of them — Platform, Mid-Western, Niger Delta — have begun production, and that the upcoming round is expected to feature fields with large reserves.”

   The increased production levels from the independents has been helped largely by a new development — divestments by IOCs. Recognising the new phenomenon which gave rise to Seplat, Orjiako said that Nigerian independents will remain preferred buyers in onshore and shallow waters IOC asset divestments. “Local companies/local company led-consortiums are expected to continue being the beneficiaries of divestitures of onshore/shallow offshore oil blocks by the IOCs who favour deep-water acreage because of their natural advantage in terms of technology, experience and financial capacity.”

   Looking at the production landscape and output levels, Orjiako noted that aside NPDC which is a government owned operator, “Seplat is the highest with 52,800 bpd from three fields; while Conoil is second with 25,000 from two fields; and Midwestern, with 13,000 bpd, according to a publication of  the Africa oil and gas report.”

Taking Seplat as a case study, Orjiako informed the gathering that Nigerian independents have done well and will continue to do so because they have broken new grounds in fresh new areas where they are helping to integrate value. These areas include “Monetisation of gas,  small scale refining and ability to handle local communities.”

He said that “SEPLAT has grown from marginal field operatorship to acquisitions via the Platform / Seplat, NPDR & WSP/ND West.”

  Describing the marginal fields program as a huge success, Orjiako said that the future is bright for Nigerian independents because they will continue to “unlock Small-Sized Reserves,  feed the Domestic Market and provide Long-term domestic energy security with many of them playing key roles in LPG (NDPR, Energia & Platform), Natural Gas (Seplat, ND West & NPDC) and Refining (Dangote as frontier investor).

- The Guardian

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