Page 7 - AfrOil Week 07 2020
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NIGERIA
NIGERIA is the largest oil producer in sub-Sa- haran Africa, and o cials in Lagos have said the country is capable of pushing output levels up from their current level of about 1.7mn barrels per day to 3mn bpd in just a few years. But new research from Wood Mackenzie warns that this optimism may be misplaced.
Last week, the consultancy said in a report shared with Reuters prior to publication that Nigerian oil production was poised to sink by up to 35% by 2030. A decline of this magnitude is likely, it argued, if international oil companies (IOCs) do not proceed with major o shore pro- jects on schedule.
Wood Mackenzie expressed particular con- cern about the pace of work at three sites: Preo- wei, which is operated by Total (France); Bonga Southwest Aparo, operated by Royal Dutch Shell (UK/Netherlands); and Owowo, operated by ExxonMobil (US). It said it expected Preo- wei to come on stream in 2025 rather than 2023, with Bonga Southwest Aparo following suit in 2027 rather than 2025.
Owowo will be delayed even further, begin- ning development in 2029 instead of 2025 as planned, it added.
ese dates are speculative, as these projects
are still in the early stages. Reuters noted last week that Total had not yet nished studying Preowei and hoped to make a nal investment decision (FID) in 2020 or 2021. It also quoted representatives of Shell’s Nigerian subsidiary as saying that it was still in discussions with its partners and the government on Bonga South- west Aparo and said that ExxonMobil had declined to comment on the matter.
Causes for concern
Nevertheless, according to the consultancy, there is a high risk that these projects will fall behind schedule because their operators, along with other IOCs, are nervous about costs and about investment conditions in Nigeria.
With respect to costs, it said, these three fields cannot be developed profitably under current conditions – that is, with world crude oil prices below $60 per barrel.
And with respect to investment conditions, it continued, IOCs have expressed concern about changes in Nigerian laws covering taxes and royalties. Investors also hope to see the coun- try move forward with the implementation of a new oil law and would like the government to be more transparent about its plans, it said.
Investors are reluctant to commit because of volatile conditions on the global petrochem- ical market in recent years, and political risks in Egypt. TPC will host the world’s largest sin- gle-train naphtha cracker, capable of producing 1.5mn tonnes per year of ethylene and 925,000 tpy of propylene.
The agreement between Bechtel and ECHEM was among a ra of documents signed
at the EGYPS 2020 petroleum conference that began in Cairo on February 11.
Among other deals, Egyptian General Petro- leum and US oilfield services giant Schlum- berger signed a memorandum on creating an Egyptian e-portal for oil and gas research. A second memorandum was also signed between Schlumberger and BP on co-operation in the eld of digitalisation.
PERFORMANCE
Wood Mackenzie: Nigeria headed for 35% drop in oil output by 2030
Shell is active in Nigeria’s offshore zone (Photo: Shell
Week 07 19•February•2020 w w w. N E W S B A S E . c o m
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