Eight Idle Oil Fields Offer Lifeline to Sinking Petrodollars.

Nigeria’s energy sector faces significant challenges, with eight idle oil fields potentially offering a much-needed boost of 900,000 barrels per day (bpd) to the country’s oil output. This increase could provide crucial support for Nigeria’s declining oil revenue, which funds the national budget but has been hit by a sharp decline in investments.

Overview of Nigeria’s Oil Reserves:

• Crude Oil Reserves: 36 billion barrels.
• Proven Gas Reserves: 206 trillion cubic feet.

Despite these substantial reserves, the country struggles to meet its target of increasing oil reserves to 40 billion barrels, primarily due to idle projects.

Key Idle Projects:

1. Zabazaba: 150,000 bpd.
2. Shell Bonga South West: 225,000 bpd.
3. Bonga North Project: 100,000 bpd.
4. Chevron Nsiko Project: 100,000 bpd.
5. ExxonMobil’s Bosi: 140,000 bpd.
6. Satellite Field Development Phase: 80,000 bpd.
7. Ude: 110,000 bpd.

Challenges and Expert Opinions:

• Investment Decline: The passage of the Petroleum Industry Act (PIA) has not yet yielded the expected increase in investments due to poor implementation and bureaucratic inefficiencies.
• Corruption and Bureaucracy: Industry experts highlight ongoing issues with bribery and delays in obtaining licenses and approvals. Austin Avuru, executive chairman and founder of AA Holdings Limited, emphasized the need for $25 billion in annual investments over the next decade to stabilize production at 2 million bpd.

Case Studies of Idle Fields:

1. Zabazaba Field:
   • Location: Offshore Niger Delta, OPL 245.
   • Operators: Nigerian Agip Exploration (NAE) and Shell Nigeria Exploration and Production Company (SNEPCO).
   • Challenges: Operations halted due to legal disputes and trials over the $1.1 billion acquisition by Shell and Eni, who were later acquitted of corruption charges. The field holds recoverable reserves of 560 million barrels.
2. Shell Bonga South West:
   • Capacity: 225,000 bpd of crude oil and 150 million standard cubic feet of gas per day.
   • Investment Opportunity: Shell Group committed $5 billion for Bonga North project development.
   • Development: Expected to start production in 2026, peaking at 146,765 bpd in 2027.
3. Bonga North Project:
   • Location: OML 118 (OPL 212P), discovered in 2005.
   • Capacity: 100,000 bpd.
4. Chevron Nsiko Project:
   • Location: OML 140, western Niger Delta.
   • Capacity: 100,000 bpd.
5. ExxonMobil’s Bosi:
   • Discovery: 1996.
   • Capacity: 140,000 bpd.
   • Development Delays: Slower than expected progress.

Current Situation and Recommendations:

• NNPC’s Role: The Nigerian National Petroleum Company (NNPC) has faced criticism for operational inefficiencies and failing to maximize output from its assets. NNPC operates several fields, including Okono/Okpoho in OML 119, which has been stuck at 10,000 bpd due to facility constraints despite potential for 30,000 bpd.
• Investor Confidence: Transparency and accountability are critical to attracting investments. The old system’s opacity has hindered the expected boost in investor confidence post-PIA.

Conclusion:

Optimizing these idle oil fields requires disciplined planning, economic reforms, and consistent government policies. Restoring investor confidence through transparency and efficient operations is crucial. The NNPC must focus on improving technical efficiency and delivering more crude oil to terminals to support Nigeria’s economy and stabilize the value of the naira.

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