Enorense Amadasu, deputy director, upstream at the Department of Petroleum Resources (DPR), says only eight of the 83 deepwater oil blocks available in Nigeria have begun production.
Speaking on Wednesday at the ongoing Offshore Technology Conference (OTC) in Texas, Amdadasu said these eight oil blocks currently produce 850,000 bpd which is 40% of the country’s total crude production.
The deputy director, who represented Mordecai Ladan, the DPR director, said 30 of the 83 blocks have been awarded while 53 fields are open.
“Production actually started from the Abo field in the year 2003 but presently Abo field is producing about 10,000 barrels. Production has declined from 30,000 bpd to 10,000 bpd,” he said.
“Immediately after that SNEPCo, Bonga field came in November 2005, followed by Erha Esso in March 2006.. all of all these fields have all peaked production and they are at declining modes.
“The challenges to deepwater production that stand out is the need for better fiscal and regulatory regime and getting the appropriate technology as things emerge to change the deepwater operations.
“For example, there is a need to make amendment on the law that says that a third party cannot bring in another FPSO (Floating Production Storage and Offloading) vessel. If that is amended, it will give room for a third party, an investor to bring in an FPSO, put it at a centre, a hub, so that all the other small reserves can be developed and tied in.”
Amadasu said the DPR is looking at accelerated lease renewals that will give more confidence to investors to key into the 53 open blocks.
Seplat CEO: Deepwater production may decline
During the discussion, Austin Avuru, chief executive officer of Seplat Petroleum Development Company Plc said the excitement and expectations that came with the deepwater discoveries did not last.
“Years after deepwater production came on, that rash of new discoveries have not materialised. All we have seen is development and production to the point where as we speak today some of the earlier producing fields have already plateaued,” he said.
“So there has been little additional exploration work, there is little additional discovery in deepwater, what we’re actually seeing is the onset if we are not careful, of a decline to deepwater production.”
Speaking on the 1999 Production Sharing Contract (PSC) terms between the federal government and the IOCs, Victor Nwokolo, chairman, house committee on upstream petroleum, said the national assembly had raised a private bill in May 2017 but after sending to the executive for assent, it was returned for amendment.
The bill, he said, was initiated to review fiscal terms for deepwater production that exceeds depths of 1000 feet based on section 5 of the agreement form.
The bill had proposed that royalties on production exceeding depths of 1000 feet should now be 3% as against 0% in the old terms that were meant to incentivize the operations of the IOCs.
Nwokolo noted that Nigeria had lost a lot of oil revenue due to the non-review of the PSC terms over the years but said in the last three weeks the national assembly has sped up the amendment of the bill and will send it for assent before May 29.