FG accelerates permits for oil producers to revive old wells
Nigeria is seeing stronger demand for its Liquefied Natural Gas (LNG) cargoes as energy disruptions from the war in the Middle East have opened commercial opportunities for the West African producer, Executive Vice President, Gas, Power and New Energy, Nigerian National Petroleum Company Limited (NNPC), Olalekan Ogunleye, has said.
The top NNPC executive told Reuters during the recent CERAWeek energy conference in Houston, Texas, that buyers are increasingly looking to Nigeria because of its proximity to key consuming nations and the scale of its gas reserves.
Nigeria LNG (NLNG), in which NNPC is the largest shareholder, can export up to 22 million metric tons per year and is building a seventh production train scheduled for completion in 2027.
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"We are right in the middle of the market. We are 10 sailing days from Europe, close to the Atlantic Basin and close to Asia," Ogunleye said. "We see commercial opportunities on top of the fact that we have the most gas reserves in Africa," he added.
Ogunleye said demand for natural gas has proven resilient, adding that the current geopolitical tensions would not derail its growth. He said NNPC has started talks on adding two new LNG trains and is also pursuing a 12 million metric tons per annum (mtpa) LNG project alongside gas-based industrial hubs to tap more than 200 trillion cubic feet of reserves in Nigeria.
Longtime LNG developer and consultant, Martin Houston, in his remarks, said the U.S.-Israeli war on Iran has heightened the need for buyers to diversify supply risk. He said African and South American countries with gas already discovered but without a current market could benefit from rising interest in new LNG supply, including floating LNG options.
Meanwhile, Nigeria has slashed the time it takes to approve applications to revive idle oil wells from weeks to hours as Africa's top crude producer seeks to take advantage of high energy prices.
The Nigerian Upstream Petroleum Regulatory Commission NUPRC) is approving permits within hours of application, people familiar with the process told Bloomberg.
With oil trading near $100 a barrel, Africa's top producers are moving to capitalise on demand as buyers turn to suppliers such as Nigeria and Angola, away from the Middle East conflict. The West African nation has also fast-tracked approvals for evacuations and barges at production facilities and export terminals.
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A spokesman at the regulator said "speedy approvals" were being given "for all activities that could increase production."
The recent surge in applications has come from mostly local oil companies seeking to re-enter old wells. They are being encouraged by the regulator that's cutting down an approval process that previously took anywhere from two to six weeks, the Bloomberg report added.
Repairing older or suspended wells for production is cheaper compared with drilling new wells, which can take years of planning, with any potential crude taking an average of four weeks to reach the surface.
Nigeria's production fell to 1.31 million barrels per day in February, the lowest level in 17 months, largely due to maintenance work at a 225,000 barrels a day production facility operated by Shell Plc.
Output has yet to recover to peaks above 2 million barrels a day, limiting the country's ability to capitalize on rising crude prices relative to its peers. The OPEC member averaged 1.34 million barrels a day in 2022, when oil surged to as much as $130 a barrel following Russia's invasion of Ukraine.
The regulator approved 500 permits to reopen old wells in 2024, including for Tony Elumelu's Heirs Energy and Seplat Energy Plc, Bloomberg News said.
The government set a production target of 1.84 million barrels per day this year, which the country has struggled to meet.
