Independents Stepping up Role in Nigeria’s Oil Industry
Independent oil and gas companies in Nigeria are increasingly raising their game, as international oil companies (IOCs) operating in the country continues the trend of asset divestment amid onshore risks.
The Nigerian oil industry, which has long been dominated by the IOCs, has seen more asset acquisitions by independent and indigenous players resulting in increased production levels from them.
Nigeria’s homegrown oil companies, a number of which are independents, are set to account for about 25 percent of oil production in five years from 10 percent in 2014.
“If you look at the history of oil production in the United States, you will see that independents played an important role as the industry was maturing,” Wumi Iledare, president of International Association for Energy Economics (IAEE) said in response to questions from BusinessDay West Africa.
“The divestment by the IOCs is not necessarily bad; it is an opportunity for indigenous players. As the IOCs go to more difficult terrain like deep offshore, then it is left for the indigenous companies to take over the onshore assets. They just need to take advantage of the migration of the IOCs to the deep offshore,” he said.
The future of the Nigerian oil and gas industry is closely tied to the emergence and continuing growth of Nigerian independents, ABC Orjiako, chairman of Seplat Petroleum Development Company, said at the PwC Oil and Gas event in Ghana on October 18, 2013.
Oando Plc, a leading independent oil and gas company, has specifically structured its upstream business Oando Energy Resources Inc. (OER) to take advantage of current opportunities for indigenous companies in the country.
OER is in the final stages of acquiring ConocoPhillips’ Nigerian upstream oil and gas business, which is expected to position OER as one of the leading exploration and production (E&P) players in Nigeria, as measured by total reserves and production.
The proposed acquisition is anticipated to close during the first half of 2014, to enable the companies to satisfy all closing conditions including the anticipated consent of the minister of petroleum resources in Nigeria.
For 2014, the company’s budgeted capital expenditures for Oil Mining Leases (OMLs) 125 (Abo field), 56 (Ebendo) and 134 (Oberan) were set at $37.5 million, $22.7 million and at $7.4 million respectively.
Seven Energy is ramping up efforts to service the Nigerian domestic gas market. The company recently secured $255 million of new equity investments from Singapore investment company Temasek, the International Finance Corporation (IFC) and the IFC African, Latin American and Caribbean Fund.
The capital investment will assist the company in the development of its growing portfolio of assets in Nigeria, where the company is focusing on the development of upstream reserves and resources and gas infrastructure to provide gas to the domestic market for power generation and industrial consumption.
The company recently acquired East Horizon Gas Company Limited, which operates the 128 km 18-inch East Horizon pipeline from Ukanafun to Mfamosing, near Calabar, and has a gas sales agreement to supply up to 25 million cubic feet of gas per day (mmcfpd).
It has completed the acquisition of SRL 905 Holdings Ltd, which holds a 40 percent interest in Oil Prospecting Licence (OPL) 905 (Anambra Basin), even as it continues the development of the Stubb Creek oil field, with the production facility scheduled to be commissioned in the second quarter of 2014.
The company’s upstream assets also include licence interests in the Uquo field, an indirect interest in OMLs 4, 38 and 41 through a Strategic Alliance Agreement with Nigerian Petroleum Development Company (Northwest Niger Delta).