Key Nigeria deepwater field ‘achieves first oil’, adds 200,000 barrels to country’s daily output

Nigeria’s deepwater oil field, Egina, achieved first oil production late on Saturday, raising the country’s daily oil production above 2.09 million barrels in December 2018, the Nigerian National Petroleum Corporation has announced.

With the Organization of Petroleum Exporting Countries (OPEC) latest output cut resolution taking effect Tuesday, January 1, Nigeria’s daily oil production should now been reduced to 1.71 million barrels.

On December 9, OPEC resolved to cut 2.5 per cent, or about 800,000 barrels from its October 2018 production levels, to boost crude oil prices and stabilize the international oil market.

The decision cut Nigeria’s output further by about 43,775 barrels, from about 1.751 million barrels last October.

But, both the Minister of State for Petroleum Resources, Ibe Kachikwu, and Nigeria’s representative in OPEC, Mele Kyari, expressed optimism Nigeria’s projected daily oil output of 2.3 million barrels in the 2019 budget was still achievable.

Both officials based their optimism on the 200,000 daily oil production expected from the Egina oil field and another 500,000 barrels of condensate, which is not usually factored into the OPEC oil production calculation figures.

Mr Kyari, who is also the General Manager, Crude Oil marketing Department of NNPC, said when added to the current daily oil production of 1.71 million barrels, it would be sufficient for Nigeria to meet its projected 2.3 million barrels oil output target.

The Egina oil field located some 130 kilometers off the coast of Nigeria at water depths of over 1,500 meters, is one of Nigeria’s ultra-deep offshore oil concessions operated by Total Exploration & Production, in partnership with the NNPC, Chinese national Oil Company, South Atlantic Petroleum (Sapetro) and Petrobras of Brazil.

In a review of NNPC’s operations for 2018, the Group Managing Director, Maikanti Baru, said the oil field achieved first oil production at about 11.20 p.m. on December 29, 2018.

“The addition of about 200,000 barrels of oil production from the Egina Floating Production Storage and Offloading (FPSO) was the industry’s major milestones achievement in 2018,” Mr Baru said.

He said the FPSO was completed and sailed away to location in August last year.

With the achievement, Mr Baru, who was quoted by the NNPC spokesperson, Ndu Ughamadu, said Nigeria’s daily crude oil production capacity rose to about 2.09 million barrels in 2018.

The increment, he said, represents about nine per cent growth, compared to the 2017 average daily production of 1.86 million barrels.

Mr Ughamadu said the NNPC upstream subsidiary, the National Petroleum Development Company (NPDC), was the major contributor to the industry’s growth in 2018, with about 52 percent daily crude oil production growth over its 2017 performance.

The NNPC spokesperson said the average production from NPDC’s operated assets alone grew from an average of 108,000 of oil per day (bod) in 2017 to 165,000bod in 2018.

He described the achievement as the strongest production growth within the Oil Industry in recent times, even as he added it was worth being celebrated.

The GMD said NPDC’s equity production share of 172,000 barrels was about 8 per cent of national daily production capacity.

Mr Ughamadu said the NNPC GMD told the staff that out of about $1.7billion, the corporation has already defrayed $1.5billion of the arrears. Joint Venture (JV) partners over a five-year tenor repayment plan,

However, Mr Baru said the NNPC would stick to the core payment agreement with the JV Partners, while transiting to self-funding IJV modes with the corporation’s partners.

Mr. Baru quoted the achievements of NNPC in the Upstream sector by listing other milestones achieved by his team to include: reduction in contracting cycle for Upstream Operations to nine months from an average of 24, even as the corporation targets a six months cycle; lowering of production cost from $27/barrel to $22/barrel; and improving on the security situation in the Niger Delta through constructive engagement and dialogue with relevant stakeholders.

Mr. Baru revealed that in the frontier basins, NNPC has intensified explorations activities in the Benue Trough, with the expected spudding of Kolmani River Well 2 on January 19.

He explained that activities would resume in the Chad Basin as soon as there is greenlight on the security situation in the enclave.

In the Midstream, the NNPC GMD stated that in 2018, Nigeria achieved an average national daily gas production of 7.90bscf, translating to 3 per cent above the 2017 average daily gas production of 7.67bscf.

He said out of the 7.90bscf produced in 2018, an average of 3.32bscfd (42%) was supplied to the Export market, 2.5bscfd (32%) for Reinjection/Fuel Gas, 1.3bscfd (16%) was supplied to the domestic market and about 783mmscfd (10%) was flared.

Out of the 1.3bscfd supplied to the domestic market, an average of 71mmscfd went to the Power Sector, while 470mmscfd was supplied to the Industries and the balance of 69mmscf delivered to the West African Market through the West African Gas Pipeline (WAGP).

Mr. Baru said NNPC would bridge the medium-term domestic gas supply deficit by 2020 through the corporation’s Seven Critical Gas Development Projects (&CGDPS), adding that a reputable Project Management consulting firm is collaborating with an NNPC team to achieve accelerated implementation of the projects.

He assured that full implementation of the project would boost domestic gas supply from about 1.5bscf/d to 5bscf/d by 2020, with a corresponding 500 per cent increase in power generation and stimulation of gas-based industrialization.

Mr. Baru said all existing power plants in the country now had a permanent gas supply pipeline infrastructure, while the corporation would also continue to expand and integrate its gas pipeline network system to meet increasing domestic gas demand.

He listed key gas pipeline infrastructure projects on which, he noted, significant progress had been made in their execution to include: Escravos-Lagos Pipeline System (ELPS II), Obiafu/Obrikom-Oben (OB3), Odidi-Warri Expansion Pipeline (OWEP), Trans Nigeria Pipeline Project (TNGP) – Ajaokuta-Kaduan-Kano (AKK) Pipeline, Trans Nigeria Pipeline Project (TNGP) and Nigeria-Morocco Gas Pipeline (NGMP) Project.