Sopuruchi Onwuka
18 November 2009
Nigeria has recorded significant progress in meeting specified policy aspirations in the upstream petroleum sector with total proven crude oil reserves jumping from 35 billion barrels in the first quarter of the year tot 38.6 billion in the third quarter.
The Director of Petroleum Resources (DPR), Mr. Billy Agha, who disclosed the figures at a media briefing in Lagos, said the figure could rise after a planned reserves audit by the agency which regulates activities of operators in the industry.
The industry is mandated to build crude oil reserves of the country to 40 billion barrels by 2010 through intense exploration activities in all the sedimentary basins around Lake Chad, in the Benue trough, Anmbra Basin onshore and offshore Niger Delta.
Instead, the reserves suffered depletion over the past few years when militant activities crippled activities in the industry and forced oil companies in then region to vacate sites.
Also production recovery following success of the amnesty program in resolving the security tension in the Niger Delta has also jumped from the lows of about 1.1 million barrels per day in the first quarter to about 2.4 million barrels per day.
However, Mr. Agha said, the industry has continued to suffer production deferment of nearly one million barrels per day in the Niger Delta in the period due to both technical and security difficulties.
He said gas reserves also took a plunge, cascading from previous level of 187 trillion standard cubic feet (TCF) to 185 TCF in the third quarter of the year.
In providing details of the changes in the national petroleum asset status, Mr. Agha said the reserves addition did not result from exploration success by from confirmation of discovered assets through appraisal and development drilling campaigns.
He did not however specify which companies recorded incidental discovery of reserve structure. He said an audit has been planned to validate the reserves declarations by oil companies in the country and build a definite figures of the nation's assets as a way of measuring progress in realization of policy aspirations and industry targets.
The appraisal and development wells that yielded the additional reserves came as oil firms returned to their concessions to resume production activities, a development that has also raised the nation's crude oil export to the international market.
According to DPR, the nation's crude oil output, including condensate, has jumped to over 2.4 million barrels per day, above the country' output quota at the Organization of Petroleum Exporting Countries (OPEC).
Mr. Agha however explained that the nation's crude oil production has not exceeded the OPEC quota of 1.67 million barrels per day (1.67 mbd) as significant part of the output comprised condensate, a natural gas liquid not included in OPEC production restrictions.
The rebound of activities in the industry, has therefore accounted for the total export of 67 million barrels and total gas production of over 950 billion nbarrels in the three month period.
The total figures come to an average crude oil production of 2.2 mbd and natural gas output of 6.6 billion cubic feet per day out of which, Mr. Agha said, 2.5 billion cubic feet per day was flared.
The productions came from a total of 176 oil fields out of a total of 303, inferring that 127 oilfields were still inactive in the period under review.
Mr. Agha said DPR has also issued permits and approvals for the lifting of crude oil, natural gas liquids and liquefied natural gas from the country's terminals in the last quarter of the month.
The upbeat in industry activities also translated to improved revenue accruals to the federation account as DPR reported a total of N312 billion from sundry industry routine charges on operators.
The DPR Director said about N308 billion was received from operating companies as royalty; N2.341 billion as penalty for gas flaring which is determined b y the commercial benchmark for the volume of gas flared; while some N1.1 billion came as miscellaneous income.
While pointing at the huge amount received as gas flare penalty, Mr Agha regretted the volume of flares that has resulted in the huge cash receipt, saying that the agency would not relent until the challenge of gas flare out in the Nigerian petroleum industry is totally overcome.
He DPR has been driving industry performance on other environmental fronts through several measures including a new policy of zero effluent discharge in specified areas.
He added that 20 waste management agencies have been certified to operate in the Niger Delta for the purpose of handling petroleum industry waste in a manner that meets regulation and world industry standards.
Meanwhile the nation's biggest oil and gas producer, Shell, has started dusting its equipment and facilities in the Niger Delta with some plants that lay dormant for years coming on stream once again.
Checks on industry activity charts by Business Champion showed that Shell which was the worst hit by the militant attacks in the area and whose operations are fraught with host community hostilities has resumed production in key sites onshore and in conventional offshore.
Shell Petroleum Development Company of Nigeria Limited (SPDC) has resumed oil production at its 115,000 bpd East Area (EA) oilfield.
The field was shut down in 2006 following a series of attacks on the facility and abduction of oil workers. The field was reopened in July this year only to be shut in again in early-September.
A Shell spokeswoman, Caroline Wittgen, confirmed the resumption of production at the facility to Reuters, saying: "We can confirm production from the EA oilfield has resumed on November 8 and is ramping up."
Shell began pumping oil at EA field off Nigeria after a two-month shutdown amid signs of increasing stability in the region.
The restart is be seen as a further positive step for the Niger Delta's improving security situation after the recent offer of an amnesty to militants by President Umaru Yar'Adua in a bid to quell unrest and violence.
Restart of EA was due to the completion of repairs on the field's Sea Eagle floating production, storage and offÂloading vessel.
The spokesman said the Sea Eagle began pumping again last week after work on emergency shutdown valves and gas compression equipment though it is not known when full capacity will be reached.
Shell lifted force majeure on EA in September and crude exports are set to hit 92,000 bpd in December, the highest volume since the output outage.
Last month Niger Delta residents were also offered 10 percent of the NNPC's stake in operated joint ventures in an attempt to stop militant attacks.
Total Nigerian capacity is more than 3 million bpd but attacks on oil facilities have hit output by more than 30 percent.
President Umaru Yar'Adua has approved 200 billion naira ($1.34 billion) in federal funding to build roads, hospitals and schools in the oil-producing Niger Delta.
The funding is the latest effort by the president to develop the impoverished region and halt years of unrest that has slashed oil and gas production.
"The projects range from the construction of bridges, roads, hospitals and schools," said Minister of Information Dora Akunyili.
A presidency source said the money would come out of the federal government's share of a $2 billion economic stimulus package released earlier this month. Decades of neglect in the Niger Delta sparked a rise in militancy and criminal activity.
Violence has subsided over the past few months after thousands of gunmen accepted Yar'Adua's offer of amnesty. However, activists fear the former militants could resume attacks if the government fails to quickly find them work.
Shell said that it would take advantage of the ongoing ceasefire adopted by militant groups to restore as quickly as possible the 800,000 bpd of production lost to militant attacks.
Shell's African Executive, Ann Pickard, while at Africa Oil Week in South Africa said that the Soku gas plant, shut down after sabotage, was restarted on October 15. "We are trying to bring back as much capacity as we can as quickly as we can," Pickard said. "We are repairing pipelines."
On the amnesty deal to militants offered by President Umaru Yar'Adua, Picard said: "The amnesty has been well supported. So far so good, not a single militant-related incident," since the cease-fire.
In raising the hope that the industry is on the path of steady recovery, Nigeria's main militant group in the Niger delta has also described peace talks with President Umaru Yar'Adua as promising.
A spokesman for the group said the meeting signalled the beginning of "serious, meaningful dialogue". The government said it was "fruitful".
Attacks by the militant group in the Delta region cost Nigeria around N154 billio a month in lost revenue.
President Yar'Adua's spokesman Olusegun Adeniyi also said the discussions on Saturday were "frank and fruitful". Nobel-prize laureate, writer and political activist, Wole Soyinka, also took part in the talks.
A three-month respite from the violence has brought back some oil and gas production, but skeptics fear the former fighters could resume violence if they do not quickly find work.
According to agency sources quoting security experts, some former militants have reverted to their old ways of tapping into oil pipelines and selling it on the international market.
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