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2023 Upstream Investments to Hit $528bn Worldwide Nigeria’s Project Lineup Adds to Global Count

By Yange Ikyaa

Investments in the upstream segment oil and gas business, covering activities such as exploration, extraction, and production are said to be on course to reach their highest levels globally since 2015, with a growth rate of 11 percent year-on-year up to a staggering $528 billion in 2023.

This is according to figures from the International Energy Agency, a Paris-based think tank, which also argued that if major oil producers maintain their plans to ramp up capacity even at a time when demand for the hydrocarbon commodity slows down, it would still result in a spare capacity cushion of at least 3.8 million barrels per day (bpd), adding further that the excess capacity will be concentrated mostly in the Middle East.

While an IEA forecast considers that a number of factors could affect market balances over the medium term, including uncertain global economic trends, the direction of OPEC+ decisions, and China’s refining industry policy, the forecast also acknowledged that oil-producing countries outside the OPEC+ alliance seem to dominate plans for increasing global supply capacity in the medium term, with an expected rise of 5.1 million bpd by 2028, led by the United States, Brazil, and Guyana.

However, within OPEC+, IEA said Saudi Arabia, the United Arab Emirates, and Iraq lead the plans for capacity building, with African and Asian members projected to struggle with continuing declines, and with Russian production also expected to fall due to sanctions, notably from the European Union (EU) and other Western Allies.

Against this backdrop, there will be a net capacity gain of 0.8 million bpd in terms of production volumes from the 23 members of OPEC+ within the period under review.

Then, moving away from the production to the refining sector, IEA projected in its latest report that the overhang in global capacity has been reduced by a wave of closures and conversions to biofuel plants, as well as project delays following the Covid-19 pandemic.

“This, combined with a sharp drop in Chinese oil product exports and an upheaval of Russian trade flows, resulted in record profits for the industry last year,” the report read in part.

“While the amount of net refinery capacity additions by 2028 is expected to outpace demand growth for refined products, diverging trends among products mean that a repeat of the 2022 tightness in middle distillates cannot be ruled out,” it further read.

As a very important oil and gas destination and an emerging renewable energy jurisdiction, Nigeria is expected to implement over 115 new oil and gas projects across the upstream, midstream and downstream sectors between 2023 and 2027, according to data obtained by Valuechain from Energy Capital and Power, an energy investment promotion firm based in Cape Town, South Africa.

This, the South African company said, is intended to maximize the development and exploitation of energy resources to achieve energy security and drive economic growth in Nigeria. It also listed up to 32 upstream projects that it said are in motion and are aimed at addressing nationwide production declines by bringing new supplies onto the market in Africa’s largest economy and most populous nation, which is also the leading producer of hydrocarbons on the continent. Some of the projects listed include:

The OML 13 field

The $3.15 Billion OML 13 Field development is projected to significantly expand Nigeria’s crude oil reserves and daily production. Operated by Nigerian Petroleum Development Limited, this field is currently in its construction stage and the project has a capacity of 184,333 barrels per day (bpd). OML 13 is expected to increase government earnings from energy monetization, with the Federal Government expected to generate $10.2 billion in revenue from the project in 15 years. The project is expected to commence operations in 2023.

The Bonga north field

With a production capacity of 110,000 bpd, the Bonga North deep-water project is expected to be operational by 2025. Operated by Shell Nigeria Exploration and Production Company Ltd (SNEPCo), Bonga North is an expansion of SNEPCo’s existing operations at the Bonga fields, which were kickstarted in 2014. The $5 billion project will unlock an estimated 525 million barrels of additional crude oil reserves in the Bonga Field, after the field reached a one-billion-barrel production milestone in February 2023.

The Okpokunou/Tuomo west cluster development

As one of Nigeria’s several projects crucial for advancing industrialization on the back of natural gas exploitation, the Okpokunou/Tuomo West Cluster Development is a conventional gas project that is being handled by SNEPCo and is set to produce 85,000 barrels-per-day equivalent of gas for local consumption. Currently in its feasibility phase, the project is set to come online as early as 2024.

Hi field

Located in the shallow waters of Block OML 144, Hi is a conventional gas development which is currently in the front-end engineering design phase. Operated by SNEPCo, Hi is expected to be operational by 2025 with a production capacity of 75,000 barrels per day.

The Preowei field

Discovered in 2004, Preowei is an oil field in development by TotalEnergies E&P Nigeria Limited. Once operational in 2024, the conventional oil project is anticipated to produce 70,000 barrels per day. The project is expected to produce up to 2047.

The HA field

Currently, under construction, HA is a $1.6 billion development in the shallow waters of Nigeria in Block OML 77. Also operated by SNEPCo, HA is expected to produce 60,000 barrels per day of oil and 250 million standard cubic feet per day of gas once operational in 2024.

SPDC – HA field development | DMS Projects

Gbaran Nodal compression

As a key expansion project of Gbaran Phase 1 and 2A Fields, the Gbaran Nodal Compression initiative includes the installation of gas compression trains to enhance the recovery of reserves in Block OML 28. Currently under construction, the project is set to add 60,000 barrels per day to SNEPCo’s production portfolio in Nigeria. Operations are expected to commence on this field in 2023.

The JK field

JK is another conventional oil project that is operated by SNEPCo. Currently in its feasibility stage, it is located in the shallow waters of Block OML 74. The project is set to achieve first production of estimated 55,000 barrels per day, beginning from 2026.

The HD field

This is a new field under development that is also operated by SNEPCo. At present, HD is in its feasibility stage and is scheduled to enter its operation phase by 2026. The project is expected to produce 50,000 barrels per day of crude oil when fully operational.

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