Mike Oduniyi And Onyebuchi Ezigbo
22 March 2004
Lagos — Nigeria loses 145,000 bpd of crude
The Nigerian National Petroleum Corporation (NNPC) and US-based oil major, Ocean Energy, at the weekend signed a Production Sharing Contract (PSC) agreement for the development and exploitation of crude oil in deep offshore bloc 242.
Also, in line with the new Federal Government moves to increase indigenous expertise in deep offshore oil exploration, the Nigerian Petroleum Deve-lopment Company (NPDC), a subsidiary of the NNPC, has acquired 25 percent interest in the bloc.
However, reports indicated that Nigeria is still currently losing about 145,000 barrels per day (bpd) of oil to theft and vandalisation of pipelines.
Speaking at the signing of the PSC agreement in Abuja at the weekend, NNPC Group Mana-ging Director, Engineer Funsho Kupolokun, said Ocean Energy and NPDC have up to 180 days to pay the sum of $32 million (N4.32 billion) as signature bonus for the bloc or lose it.
The NPDC, which is the oil exploration arm of the NNPC, will pay $8 million (N1.08 billion) while Ocean Energy will contribute $24 million, representing its 75 percent stake in the bloc.
The agreement is for a 10-year period for Ocean Energy to carry exploration campaign and should oil be found, will convert to a 20-year Oil Mining Lease (OML).
Bloc 242, which Kupolokun said held very good prospect, is the second deep offshore bloc Ocean Energy would be acquiring in Nigeria, after the OPL 256 bloc it got last year for $145 million fee.
The American company also has the NPDC as partners in what the NNPC said was part of the clause in the PSC agreement for "a joint conduct operation" in the prolific deep offshore region.
"We've always had in the PSC provision for joint conduct of operations, which means for some aspects or most of the jobs we want to do it together in a manner that the NNPC is involved in the project execution," said the NNPC GMD.
"This we find out that Ocean Energy is actually implementing. Today in OPL 256, NNPC staff are occupying some specific positions," he said, while adding that other multinational oil companies would be compelled to abide by the PSC clause aimed at capacity building.
Other deep offshore blocs in which the NPDC had taken equity were OPL 244, operated by Agip, OPL 214, involving ChevonTexaco and ExxonMobil and OPL 318, also by Chevron and Phillips.
In his own address at the signing ceremony, the Managing Director of Ocean Energy, Mr. Raymond Machant, said Nigeria represents a special place in the company's investment portfolio.
He added that the company would be drilling up to 10,000 feet of water depth but had "great hope that will be successful."
The Federal Government looks up to the deep offshore drilling to meet the target of raising the nation's crude oil reserves to 40 billion barrels by 2010 from the current level of 34 billion barrels.
The DPR stated that drilling in the region between 1996 and 2003 in which a total of 110 wells were explored, yielded four billion barrels of crude.
Kupolokun said PSC agreements for another three deep offshore blocs in OPLs 249, 247 and 216, would be signed in two weeks time.
However, the loss of about 145,000 bpd of crude to theft and vandalisation is said to be costing the country about $5 million in revenue.
Kupolokun who made this known said Shell was currently losing some 20,000 bpd to crude theft and another 40,000 bpd to pipeline vandalisation. The remaining 85,000 bpd loss is accounted for by Chevron.
He said the volume of crude lost had actually dropped from 386,000 bpd level as at mid last year. "At that time, some 13 stations were shut," he said.
"Vandalisation is a big problem. When you vandalise a line then you shut down the well so a number of barrels has to be deferred," he added.
Reduction in losses, he said, was achieved through high profile consolations and constructive engagement of stakeholders by the highest echelon of government.
"Efforts of government in this area have paid off substantially and in the next few weeks Chevron will able to go into some of the fields on the west of the Niger Delta...even that 145,000 bpd will be reduced to less than 100,000 bpd very soon," said Kupolokun.
Be the first to Write a Comment!
Copyright © 2004 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
