DOMESTIC OIL PRODUCTION NEWS

Thursday, January 29, 2009

Nigeria recently took delivery of a new offshore production platform from Nigerian owned Brown Rocks Nigeria Ltd. It was delivered at the Calabar Port in Cross Rivers State and is currently being installed. The local company, Brown Rocks Nigeria Ltd., constructed the facility in approximately one year. It is the first of its kind to use 100% Nigerian workers. It can produce up to 30,000 barrels per day and is called 'Adanga North B Well head Platform development ADN-B-WHP' .

http://cache.daylife.com/imageserve/07smbj1bKB3wK/610x.jpg


SIGNIFICANCE
Adding to the number of oil production facilities is a key aspect of the Nigerian governments goal of 70% local oil content in the country's oil and gas industry operation by 2010. This will improve Nigeria's capacity to produce oil, a key income earner for the country. This new platform could also expand production of liquid natural gas, as Nigeria intends to become the second largest LNG supplier in the world. Furthermore, given that Angola temporarily surpassed Nigeria as Africa's top oil producer in 2008, Nigeria aims to increase daily oil exports to 4 million barrels per day. The ability to produce more oil will be helpful in improving Nigeria's current electricity woes as some of the nation's power generating facilities suffer from low oil supply, thus depriving the nation of regular electric supply.

And, despite the concerns that Nigeria only has 43 more years of oil reserves, the government plans to increase its proven oil reserves by 5.3% to 40 billion barrels bbl by 2010. This move to find more oil offshore is crucial in lessening the need to pump oil from within the Niger Delta given the current problems that have arisen with tensions between the federal government and various tribes in the region and of course, militant groups.

THERE IS SOME CAUSE FOR CONCERN
Although there is much to be excited for with the advent of a new petroleum platform, there is some cause for concern due to the current price of oil. The new head of the Nigerian National Petroleum Corporation (NNPC), recently stated that oil prices must remain above $40 per barrel for offshore oil operations and explorations to be economically viable.
Nigerian Blocks
Nigerian Oil Blocks, Source: RIGZONE
Mohammed Sanusi Barkindo raised some concerns about how viable offshore platforms will be when he said on Thursday, January 29th,
"Deepwater developments in the region, particularly in the ultra-deep, require a sustainable crude price in excess of $40/bbl to support continued production, exploration and development.
"Given the uncertainty in crude prices in the long run, the industry needs to examine ways of achieving a steep reduction in costs."
The price of oil went as high as $147 per barrel in July of 2008 but has now slid down to as low as $33 per barrel, the lowest in 4 years, on January 21st. Given the continued low price of oil, one can only wonder how soon will the new Adanga platform become operational and profitable. Hopefully, this investment in oil production will eventually pay off and be an asset to Nigeria's energy sustainability goals.


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imnakoya said...

To me the big news here is Brown Rocks Nigeria Ltd, a local fabricator. Nigeria needs to identify other local players that have the capacity to deliver and put them to work.

Danny Bagucci said...

Guess that's good news for Nigerian Content -- Doubt any of the "bigger" players - the ExxonMobils, Shell and Chevron would commit the funds to a wholy indigenous company tho.. Been on both sides of the divide and I know what antics both contractors and company men perform just to hijack a contract like this...

In my head and around me said...

This is really interesting. What company ordered the platform?

SOLOMONSYDELLE said...

@ Imnakoya: Yes, Brown Rocks is very exciting, isn't it? However, like you know there are many companies out there that are Nigerian owned and run that do good work, the problem is we just don't hear about them often enough. If there are any companies out there, please let me know!

I for one can mention Income Electrix Limited, a Nigerian controlled power company that has successfully completed the first phase of a 36 megawatts Independent Power Plant (IPP) in Freetown, Sierra Leone. I wrote about them this time last year.

Anyway, it is good to see you. Let me swing by your side and catch up.

@ Danny B: yes, it is good news for Nigerian content. So, you have witnessed the oil wars eh? You must tell me your war stories then, I bet they are very interesting.

Hope all is well.

@ IMHAAM: Addax Petroleum Nigeria Limited ordered the platform. Can't tell you too much about them but I discovered some other Nigerian owned company called Amakpe International refineries that I am trying to learn more about. Apparently they are supposed to set up a refinery in Akwa Ibom this year or have done it already. If you or anyone else can point me in the right direction, I would appreciate it.

Thanks, how body?

Beauty said...

Does one regard a given glass of water, filled to half its capacity, as half full or as half empty? Great news but no thank you for the pinch of salt. Cavemen did not go from discovering fire to building pyramids. Nigeria: Which Way Forward for Steel Industry? includes an historical account of a plan that lacked coherence. Most Nigerian issues involve pies in the sky designed to earn but never to satisfy local demand. It is flawed logic that has always boomaranged.

Awa Music Map said...

Does Nigeria have a plan for its economy after its oil reserve runs out?

mp3 players said...

Hey I just found your blog and I must admit that I've been reading for the last half hour. Nice blog, like it..

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