Oil & Gas

The Nigerian Petroleum Development Company claims it is now well-positioned to meet its crude oil production target by 2015

|  By Maureen Chigbo   |  Dec. 31. 2012 @ 01:00 GMT

THE Nigerian Petroleum Development Company, NPDC, the exploration and production arm of the Nigerian National Petroleum Corporation, NNPC, is working towards meeting its target of producing 250,000 barrels of crude oil per day by 2015. It is also harnessing its resources to produce more gas that will be channeled into the power sector despite spirited attacks from the international oil companies, IOC, to derail the activities of the corporation by their attempts to railroad it into awarding contracts without following due process. The company plans to deploy two more rigs, in addition to the two it already has, to drill 40 wells in the next five years.

Already, the NPDC is aggressively drilling some of its Oil Mining Leases, OML, that will result in increased production. They are Okono 6 and 7 oil wells in its OML 119 which are yielding 12,000 barrels per day.

Victor Briggs, managing director of NPDC, said Okono 6 and 7 wells are significant not just because they represent the company’s independent efforts at growing production, but also because of the prolific nature of the wells which are producing at an average of 6,000 barrels per day compared to older wells which are producing at an average of 3,000 barrels per day.

This has contributed to increasing NPDC’s production figure from 65,000 barrels per day in 2010 to 130 barrels per day now. The bulk of the increase in production comes from the assets handed over to the NPDC through divestment by some of our JV partners. “We realise that for us to meet the target of 250,000 barrels per day by 2015, we need to build on this by exploring further and drilling more wells. Okono 6 and 7 wells represent our success story in this direction,” Briggs was quoted as saying in a statement signed by Fidel Pepple, acting group general manager, Group Public Affairs Division, NNPC, December 17.

The company has also made tremendous progress in the area of gas supply in keeping with the directive of Diezani Alison-Madueke, minister of petroleum resources, to step up gas production and supply to meet the national power generation aspiration.

“We have commenced gas production from our Oredo Gas Plant since November and we currently produce 65mmscf per day. By the end of the first quarter of next year, when we shall complete the second phase of this project, we will have additional 100mmscf per day and 4,000 metric tons of Liquefied Petroleum Gas, LPG,” Briggs said.

The Oredo Gas Plant with gas feedstock from NPDC’s OML 111, was originally designed to supply gas to the Ihovbor Power Plant in Edo State and since the power plant is not ready, the gas is being supplied to the Nigerian Gas Company, NGC, for onward transmission into the national gas grid for power generation.

Briggs commended President Goodluck Jonathan and the minister of petroleum resources, for their courage in halting the trend of asset stripping that had hobbled NPDC over the years, adding that without their support in assigning acreages to the company, the modest achievements recorded in crude oil and gas production would not have been possible.

Before now, the NPDC was given wells that were abandoned by the international oil companies, IOC, to drill. The wells were usually not lucrative and made it impossible for the NPDC to produce enough crude oil to match the records of other national oil companies in Brazil and Malaysia.

Meanwhile, the NNPC has dismissed allegations by some IOCs accusing it of deliberately stalling the execution of some multibillion dollar projects in the sector. The NNPC says the IOCs will not stampede or browbeat it into abandoning its firmly established process of contract award by what it termed “calculated media blackmail from the IOC and other interested parties.”

A statement signed by Pepple noted that the industry normally expressed concern in the process leading to the award of major oil and gas projects. But that “NNPC has an established procedure of contract and project approval which includes conduct of economic analysis to establish project viability and federal government’s stake from investments in the upstream’’.

The NNPC explained that this procedure must be followed and the IOC’s could not stampede it into taking decisions that may be inimical to the nation because of their pecuniary interests. The NNPC said it was untrue that it had not held its periodic group executive committee, GEC, meetings to discuss some major projects like the TOTAL Egina deep offshore project and endorse same to NNPC Board for approval.

“This claim is untrue as GEC meetings are being held weekly or fortnightly. However, Erha North Phase 2 and Egina Project contracts have not been discussed yet at these meetings because NNPC management is critically reviewing the overall economics of the projects in view of the high cost estimates in order to establish their validity, maximise federal government’s stake and ensure comparative price competitiveness vis-a-vis benchmarks.’’

The NNPC also dismissed as misplaced and untrue, the allegation that Abiye Membere, the group executive director, exploration and production of the NNPC, was behind a phantom contract splitting attempt of the Egina Project and the previous Bonga Southwest project.

According to the corporation, the alleged contract splitting of Bonga Southwest was never on the cards as there was never a time that SNEPCO, Shell Petroleum Development Company’s exploratory arm, proposed three Floating Production Storage Offloading facility, FPSOs, for Bonga Field Development. “Membere also did not scuttle Bonga Southwest/Aparo Project six years ago. He was the GM, PSC Division of NAPIMS in 2006 and helped to move forward the strategy for a leased FPSO project for Bonga Southwest /Aparo project. He was deployed from this position to another position in NNPC’s Engineering & Technical Directorate in 2007 during a routine management re-organisation exercise’’, Pepple said.

The corporation explained that Bonga South/Aparo was recycled for concept re-evaluation in 2009 when dearth of bidders were recorded on the major packages at the technical stage and with a potential of only one bidder emerging to the commercial stage of the FPSO tender. This decision to recycle Bonga was taken by NAPIMS’ top management and not Membere.

The NNPC described as untrue and laughable, the allegation that it blamed lack of funding as the cause for the lull in the execution of the project. “This claim is untrue as there is no funding challenge in PSC because operators fund the investment 100 percent’’.

The NNPC said that despite the spate of attacks, it remains focussed on its core mandate of ensuring that the federal government and the Nigerian people derive maximum benefit from the proceeds of the nation’s hydrocarbon resources.

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