….as Buhari targets zero militancy in oil rich region by mid 2017
Nigerians received some news about its crisis plagued oil and gas sector yesterday 27 October, when ExxonMobil announced the discovery of an oil field offshore Nigeria, projected to contain as much as one billion barrels of crude oil reserves.
At an average price of US$50 per barrel, the new field is worth US$50 billion in potential revenues for the Nigeria oil and gas industry over the next few years, with a potential to rise higher if the international prices of crude oil rise.
The discovery is significant because it also reverses the trend of consistent decline in Nigeria’s crude oil reserves since 2007. Nigeria is currently estimated to have reserves of slightly below 30 billion barrels of crude, mostly located onshore and offshore Niger Delta. This discovery will boost the country’s hopes of hitting 40 billion in crude oil reserves by 2020.
Announcing the discovery yesterday, ExxonMobil said the field has a “potential recoverable resource of between 500 million and one billion barrels of oil.
“We are encouraged by the results and will work with our partners and the government on future development plans,” said Stephen M. Greenlee, president of ExxonMobil Exploration Company.
The company said in a statement that “The Owowo field spans portions of the contract areas of Oil Prospecting License 223 (OPL 223) and Oil Mining License 139 (OML 139).”
ExxonMobil holds 27 percent interest and is the operator for OPL 223 and OML 139. Joint venture partners include Chevron Nigeria Deepwater G Limited (27 percent interest), Total E&P Nigeria Limited (18 percent interest), Nexen Petroleum Deepwater Nigeria Limited (18 percent interest), and the Nigeria Petroleum Development Company Limited (10 percent interest).
Sources, in the oil and gas industry noted that the huge discovery re-emphasizes the need for government to urgently put in place a regulatory framework for the oil and gas sector by hastening the passage of the Petroleum Industry Bill (PIB) as well as ensuring that peace is achieved in the region to spur further investment and exploration activities, if the country wants to achieve its target of producing four million barrels of crude oil per day by 2020.
But the Buhari presidency is already thinking along those lines as it released an ambitious road map for the oil sector in Abuja on Thursday. The new road map targets zero militancy in the country’s oil rich Niger Delta region by mid 2017.
Ibe Kachikwu, Minister of State for Petroleum Resources, who announced this said government intends to intensify security with a new apparatus that makes the oil companies fully responsible for safety of their facilities even as negotiations go on between stakeholders and the government.
The new road map tagged the ‘Seven Big Wins (2015-2019)’ contains key short to medium term priorities to grow the sector, focusing on Niger Delta and Security; Policy and Regulation; Business Environment and Investment Drive;
Transparency and Efficiency; Stakeholder management and international coordination; Gas Revolution; and Refineries and Local Production Capacity.
“We have submitted a roadmap to the President, which he has approved. Some of it is that the security in the Niger Delta is going to move from the responsibility of the military and the country’s security apparatus, to that of the oil companies as it is done everywhere the world over.
“This means they would need to institute processes that would work with local communities to guide and protect their production facilities,” Kachikwu stated at the unveiling of the ‘Seven Big Wins’ a roadmap for Short and Medium Term Priorities to Nigeria’s Oil and Gas Industry at the Presidential Villa Abuja.
Kachikwu observed that all over the road, oil companies take care of their facilities and that while those collaborations may not be armed, it covers the trust deficit that existed in the region and provides very unique earnings and income, making opportunities for people within local communities.
He further stated that as long as the locals are visibly engaged in things that are income earning, “the temptation to get into the sort of destruction that we see would be limited.”
He said the presidency has also agreed to look at the possibility of setting up a specialised petroleum force. “That is going to draw on the elites of the security services, and be provided with resources that are amphibious, that are technology driven to enable them to be able to respond to the request of the oil companies if they get overwhelmed outside their first line security.”
Meanwhile, President Buhari will be holding talks with 50 leaders from the region next week Tuesday in efforts to end the agitation from the oil-rich region and achieve the zero militancy target, Kachikwu further said.
Kachikwuw said there will be need to create stability incentive schemes, jobs and investment opportunities in the Niger Delta zone.
He said the target really is to have an incident reduction by 90 percent by 2018 and
to target zero militancy and shut down so that “whatever shutdown experienced by middle of next year we expect it to be production slippages and not militancy issues. We must resolve current militancy problems and bring back product to 2.2million barrels per day.”
Kachikwu further announced plans to launch a $10billion infrastructural rebirth investment programme in the Niger Delta not necessarily from the coffers of government but from oil companies, investors, individuals who are ready to do infrastructural investment for tariff.
He said the investment will not be tied to the budget and that government will look at cross-border investments to strengthen the region.
“What is most important is not the number of the fund; it’s the conceptualisation of that funding. It is the fact that governors will have to come together as a regional block to begin to look at cross-state investments, whether they be roads, railways, whether they be town facilities or they be specialist
hospitals. And so we are going to pool in energy and ensure we are looking at cross border investments to strengthen the region” he said.
The government is also taking a critical look at the amnesty programme which is winding up in about one year. The minister said there would be activities like coastal patrols, Niger Delta paramilitary type organisations- not armed, to absorb some of the trained hands from the programme, as well as funding for those who want to start up their own businesses.
In the business and investment drive, government seeks to raise more funds through leveraging on private sector exploration of the Lake Chad basin.
“My vision is to encourage the private sector to go into Lake Chad basin and find oil.
“We are targeting to raise over $5billion in short term funds for this government and over $20 billion in medium to long-term funds. We need to cut contractual times for average of two years to average of three to six months. We need to reduce government stronghold on the oil sector so that the private sector can flourish,” he said.
The roadmap also targets hundred percent local refining capacity by 2010 and by 2018 with a hope to stop importation of petroleum products while licensing private refineries, to look at investing in private refinery.