Local firms drive new growth phase in Nigeria's oil sector
Leading the charge are companies which bought onshore and shallow water assets from oil majors planning billions of dollars of investments to develop abandoned fields.
Smaller producers are also pulling their weight, for example Nigeria's first locally developed and operated onshore crude terminal, Otakikpo, began loading operations on Monday. Built by Green Energy Limited and located in the OML 11 block near Port Harcourt, it marks a milestone in local capacity.
Shell (SHEL.L), opens new tab loaded the first crude cargo through the 360,000 bpd capacity terminal on Monday, opening up potential drilling prospects for over 40 stranded fields in the region.
Similarly, Conoil Producing Limited (CONOIL.LG), opens new tab recently shipped the first cargo of its new Obodo crude blend from the onshore OML 150 in the Niger Delta. The cargo was lifted by Oando Trading, a subsidiary of Oando Plc (OANDO.LG), opens new tab which bought ENI's (ENI.MI), opens new tab divested assets.
Following this trend, Renaissance Africa Energy — after acquiring Shell's onshore assets — is committing to investing $15 billion over the next five years in its oil and gas operations. The company aims not only to balance its portfolio by increasing crude oil production but also to double its gas output once a key local gas pipeline is completed.
Similarly, Seplat Energy (SEPLAT.LG), opens new tab, following its acquisition of ExxonMobil's (XOM.N), opens new tab Nigerian shallow-water assets, recently announced plans to reopen 400 previously shut-in wells. CEO Roger Brown said the company is set to invest up to $320 million this year in drilling campaigns and infrastructure, with the goal of boosting crude production to around 140,000 barrels per day.
"We are focused on reviving existing wells, expanding drilling campaigns, and increasing gas volumes," Brown said during the company's annual general meeting.
While these developments show the increasing role local producers are playing amidst government reforms, they are also grappling with challenges.
"These operators face higher costs due to security challenges, community disputes, oil theft and ageing infrastructure – a key aspect of reducing costs for operators will be addressing these challenges," said Mikolah Judson, an analyst at global risk consultancy, Control Risk.
These local players, signal a new phase for Nigeria's oil and gas sector and could provide support for the government's plan to raise oil output by additional 1 million barrels per day (bpd) next year, head of Nigeria's oil regulator said.
They now account for over half of Nigeria's oil production from around 40% before the oil majors completed their divestment programmes according to the regulator's data.
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