Drilling resumes on deepwater Egina oil field Nigeria

Looks like Nigeria's ramped up E&P is working...

OPEC’s Oil Production Rises By 120,000 Bpd As Nigerian Output Rebounds

By Michael Kern - Mar 02, 2023, 9:00 AM CST
oilprice.com/Energy/Energy-General/OPECs-Oil-Production-Rises-By-120000-Bpd-As-Nigerian-Output-Rebounds.html

- OPEC’s crude oil production increased by 120,000 barrels per day in February, driven by a rebound in Nigerian output.

- While Nigeria’s production increased to a one-year high of 1.44 million bpd, the country remains well below its output quota.

- OPEC’s output, which fell by 49,000 bpd in January, climbed up to a total of 29.24 million bpd in February.

OPEC raised its crude oil production in February by 120,000 barrels per day (bpd) amid a rebound in Nigerian output which, however, continues to be well below the African country’s OPEC+ quota, a Bloomberg survey showed on Thursday.

OPEC pumped 29.24 million bpd of crude last month, up by 120,000 bpd from January, according to the survey based on tanker-tracking data, information from officials, and estimates from consultants.

In January, OPEC’s production fell by 49,000 bpd from December as top producer Saudi Arabia slashed output by 156,000 bpd, according to OPEC’s latest Monthly Oil Market Report (MOMR). The report showed that Nigeria and Angola boosted their production the most in January, by 65,000 bpd and 47,000 bpd, respectively. But these producers are among the biggest laggards in their OPEC+ targets—they continue to pump well below their quotas.

In February, Nigeria accounted for two-thirds of the rise in OPEC’s oil production as its output hit a one-year high of 1.44 million bpd, per the Bloomberg survey released today. Recently, the Nigerian government has reached a security deal with a former warlord in the Niger Delta—a deal that appears to be holding off threats to production and leading to a recovery in Nigeria’s oil production.

But the estimated 1.44 million bpd output from Nigeria in February is still well below the country’s quota in the OPEC+ deal, at 1.742 million bpd between November 2022 and December 2023.

According to the Bloomberg survey, the other OPEC producers largely held their oil output steady in February.

The Reuters survey from earlier this week also estimates OPEC’s production to have risen in February by 150,000 bpd compared to January. For February, Nigeria was behind OPEC’s largest increase in production, with the African nation boosting production by 100,000 bpd. Iraq saw the second-largest increase in production, according to the Reuters survey.

By Michael Kern for Oilprice.com

My guess is that politics, crime, and corruption contributed to fits and starts blurring the past and the future. 

I did a few searches and found some information that indicated there are 45 deepwater wells and 44 are in Egina. Not sure how accurate that info is.

I also found as of October 2022, there were 966 land rigs in that region, with a further 14 rigs located offshore. These numbers are higher than in the past year, as sanctions on Russian exports have slowly led to greater exploration activity in North America. 

Excerpt: 

The poor performance of President Buhari’s first term continued and even worsened because of the pandemic and his inability to professionalize the military in its campaign against the Islamist insurgency. The military suffered repeated setbacks and faced new challenges in central Nigeria and in the northwest, where several thousand people lost their lives, killed by organized criminal gangs that specialized in cattle rustling, looting villages and kidnapping ordinary people and students for ransom. In addition, the only halfheartedly pursued anti-corruption campaign did not yield any significant results. The increase in violence and crime indicates that endemic corruption has reached new heights, and the militarization of state and society is increasing.

The political system still faces fundamental problems regarding state coherence, institutional efficiency of the political and administrative system, internal security, patterns of democratic representation and attitudes, enforcement of the rule of law and economic reform. Likewise, economic structure and performance still suffer from major shortcomings: very modest economic growth rates and a COVID-19-induced recession in 2020, poor handling of economic and financial affairs, a high unemployment rate, poor handling of the pandemic. At the same time, the communication sector, the religious industry, retail trade and domestic construction flourished, although on a smaller scale than previously, due to the effects of the pandemic.

Significantly decreased crude oil and gas prices during the pandemic only began to recover on a modest scale toward the end of the period under review. This may pave the way for a slow recovery from Nigeria’s worst economic recession in its history, depending, however, on how quickly the pandemic can be controlled globally and nationally.

Macroeconomic conditions were unstable, foreign reserves seriously depleted, domestic and foreign debts soared, prompted by huge deficit spending. The exchange rate on the parallel market fell to some NGN 480 to the U.S dollar after the government and the central bank devalued the Naira twice to NGN 381 to $1 in 2020. As far as international credibility and cooperation are concerned, the achievements of the government under President Buhari are rather poor. Cooperation with neighboring countries in the fight against Islamist terrorists suffered setbacks. The government’s relationship with ECOWAS was mixed. The already-precarious security situation worsened and created further uncertainties for the vast majority of Nigerians. Nigeria faces an uncertain future.

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And this...

www.thecable.ng/nigeria-among-oil-producers-most-vulnerable-to-political-instability

Nigeria among oil producers ‘most vulnerable to political instability’

March 26, 2021 - by Haleem Olatunji

Verisk Maplecroft, a risks analysis and data intelligence company, says Nigeria is one of the oil-producing countries most vulnerable to political instability.

This is contained in the company’s political risk outlook 2021 report released on Thursday.

The report attributed the global migration from fossil fuels to political and public pressure to tackle climate change.

It warned that those who fail to adapt “could face steep changes in credit risk and policy or regulatory volatility as they enter doom loops of shrinking hydrocarbon revenues, political turmoil, and failed attempts to revive flatlining non-oil sectors”.

“With the energy transition accelerating and Covid-19 hollowing out any recovery oil made over recent years, time is running out for a number of countries that have failed to diversify their economies away from exporting fossil fuels,” the report read.

“According to our data, Algeria, Iraq and Nigeria will be among the first casualties of a slow-motion wave of political instability that will engulf the most exposed oil producers over the next three to 20 years.”

Crude oil contributes half of the government’s income and about 90 percent of Nigeria’s foreign exchange earnings.

In April 2020, Mele Kyari, group managing director, Nigerian National Petroleum Corporation (NNPC), had said Nigeria had to beg buyers to purchase its crude oil at a meagre price of $9 per barrel.

West African countries including Angola, Gabon, Congo, Cameroon and Equatorial Guinea, with “fragile autocratic or semi-autocratic political systems”, were also named as high risk.

The report noted that most oil-producing countries have failed to diversify or have gone backwards since the 2014 oil price crash.

It said if countries’ external break-evens remain above what markets can offer, the available option will include drawing down foreign exchange reserves like Saudi Arabia since 2014 or devalue their currency like Nigeria or Iraq in 2020.

The Central Bank of Nigeria (CBN) devalued the naira twice in 2020.

Verisk Maplecroft said such measures will help in “rebalancing their imports and exports at the expense of living standards”.

“Our analysis suggests that many, if not a majority, of net oil producers are going to struggle with diversification largely because they lack the economic and legal institutions, infrastructure and human capital needed,” it said.

“Even when such institutions are in place, the political environment, corruption or governance challenges and entrenched interests mean some may not reform their way out of trouble, even where it is clearly the rational course.

"If a storm breaks, it will break first in Algeria, Nigeria, Chad and Iraq. It will be all the more disruptive here because of these countries’ fixed or crawling exchange rate regimes.”

The report noted that the United Arab Emirates, Qatar, Saudi Arabia and Kuwait are more politically stable than most of their oil-producing counterparts.

It said their economic institutions and resources make them better able to diversify.

Nigeria to unlock untapped deepwater resources with oil majors
EXPLORATION & PRODUCTION
August 19, 2022, by Melisa Cavcic
www.offshore-energy.biz/nigeria-to-unlock-untapped-deepwater-resources-with-oil-majors/

In a move to bring new investments into the oil and gas sector and boost production by tapping into Nigeria’s deepwater hydrocarbon potential, the country inked new production sharing contracts (PSCs) for six offshore licences with oil majors.

The execution of fully termed agreements for the renegotiated PSCs was revealed on 12 August 2022, less than a month after President Muhammadu Buhari unveiled on 19 July 2022 the Nigerian National Petroleum Company (NNPC), a development which saw the firm officially transiting into a limited liability entity as enshrined in the provisions of the Petroleum Industry Act (PIA) 2021.

Legal and fiscal uncertainties presented a hurdle for oil majors when it comes to investing in new PSCs in Nigeria, which means that many previously signed PSCs by Shell, ExxonMobil, Chevron, Eni, TotalEnergies, and Equinor were due to expire soon.

As the PIA stipulates that new PSC agreements under new Heads of Terms will be signed between NNPC as a concessionaire and its contractor parties within one year of signing the PIA into law with a deadline of 15 August 2022, this paved the way for the resolution of lingering disputes which created investment uncertainty and stifled new investments in Nigeria’s deepwater assets.

Therefore, NNPC used the parties’ interest to renew the PSCs as they were due to expire to sign the renewed ones, which are expected to provide several benefits such as improved long-term relationships with contractors, elimination of contractual ambiguities, especially in relation to gas terms, and enable early contract renewal, amongst others.

Mallam Mele Kyari, NNPC Group CEO, explained that renegotiations were in line with the provisions of the PIA with other improvements to the PSCs aimed at driving performance in the PSC operations. Kyari outlined that the negotiations were completed within the timeframe specified by the PIA for all renegotiated PSCs, stressing that “the meaning of this is that there is now a great deal of clarity between NNPC and its partners in the deepwater space.”

During a signing ceremony held at the NNPC Towers in Abuja, the parties renewed their agreements in five oil Mining Leases (OMLs) – 128, 130, 132, 133, and 138 – a development that is anticipated to generate further investments in the upstream sector and boost investors’ confidence while also unlocking over $500 billion in revenue for the country.

These recently inked PSCs offer more opportunities for boosting Nigeria’s crude oil production and revenue base. Commenting on this, Osagie Okunbor, Shell Nigeria Country Chair, described the execution of the OML 133 PSC contract as “a significant progress towards harnessing the deepwater resources of Nigeria.”

Richard Laing, ExxonMobil Nigeria Chairman/Managing Director points out that the renewal of the Usan and Erha leases validates ExxonMobil’s commitment to maintain a deepwater presence in Nigeria, through its subsidiary, Esso Exploration and Production Nigeria.

NNPC elaborated that the signing ceremony was witnessed by the Minister of State for Petroleum Resources, Chief Timipre Sylva (represented by the Permanent Secretary in the Ministry); Board Members of NNPC, led by the Chairman/Senator, Margerie Chuba Okadigbo; Chief Executive of NUPRC, Gbenga Komolafe; Chief Executive of NMDPRA, Farouk Ahmed, Executive Secretary of PTDF, Dr Bello Aliyu Gusau and the Executive Chairman of Federal Inland Revenue Service (FIRS), Muhammad Nami.

Rick Kennedy, Chevron Nigeria Chairman/Managing Director highlighted that Chevron is proud of its strong partnership with Nigeria and its various partners and remains committed to supporting the country to develop its energy resources “safely and reliably.”

According to NNPC, the recent negotiations will put to rest the protracted dispute between the company and the licensees in OMLs 125, 128, 130, 132, 133, and 138 PSCs. These PSCs and their leases – except OML 130 – will be valid for another 20 years under pre-PIA laws, while the OML 130 is to be renewed under PIA terms.

In an update on 16 August 2022, NNPC disclosed that it had signed the last of the 1993 dispute settlement agreements and renewed the PSC for the OML 125 with Nigerian Agip Exploration.

When it comes to oil majors’ most recent developments in Nigeria, it is worth noting that TotalEnergies started production in July 2022 from a field tied back to existing facilities.

This is expected to deliver peak production of 50,000 barrels of oil equivalent per day by the end of 2022.