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' .
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.
"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.
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."Given the uncertainty in crude prices in the long run, the industry needs to examine ways of achieving a steep reduction in costs."
Related Articles of Interest:
- Nigerian Power Scandal: Authority Stealing
- Who Will Develop Nigeria?
- Who Will Develop Nigeria Pt. 2