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Oil major, Royal Dutch/Shell Group, is currently reviewing its deep offshore strategies to enhance deep water operations in the country.
In a media chat in Lagos on Wednesday, Igo Weli, country head corporate relations and director, Shell Petroleum Development Company, SPDC, said despite global concern and western nations incertitude to fund fossil fuel development, Shell is creating new opportunities in deep water frontier.
Weli, said though the company is investing in green energy space, fossil fuel will still be relevant in global economic development and as such Shell will not abandon its producing assets and will also focus on new field development.
Shell early in the year put some assets on sale which reportedly attracted five indigenous oil and gas companies.
The firms said to be eyeing the assets valued at about $3 billion are Seplat Energy, Sahara Group, Famfa Oil, Troilus Investments Limited, and Nigeria Delta Exploration and Production (NDEP).
Shell has stakes in 19 oil Mining Leases in the country’s onshore oil and gas joint venture. Shell Petroleum Development Company (SPDC) controls a 30 per cent stake in the venture; the Nigerian National Petroleum Company Limited (NNPCL), 55 per cent; TotalEnergies 10 per cent and ENI five per cent.
Shell opened discussions with the Federal Government last year on its decision to sell part of its stakes in the onshore fields where it has been active since the 1930s. The divestment from some of the assets is seen as part of a global drive to reduce its carbon emissions.
The firm has had issues with spills in the Niger Delta which have often been linked to pipeline vandalism, oil theft, and sabotage as well as operational issues with enormous repair costs and high-profile lawsuits.
Weli, said one third of Nigeria’s deep water production comes from the Bonga and Erha fields.
Shell Nigeria Exploration and Production Company, SNEPCo, pioneered deep water oil and has production from the Bonga field in the Gulf of Guinea where depths reach more than 1,000 meters.
Since production began in 2005, Bonga alone has produced more than 900 million barrels of oil.
Though Weli, confirmed reported delay in the expansion work at its Nigerian offshore Bonga field by another two years, which has dealt a major blow to Nigeria’s quest to grow its crude production after a series of technical and operational setbacks, he said efforts are ongoing to return to the field.
It was only in May 2021 that Shell, along with its partners, signed a deal with the Nigerian National Petroleum Company Ltd (NNPC) in the deepwater oil block Oil Mining Lease 118, clearing the path to a major expansion of the country’s Bonga oil and gas field.
The development had previously been shelved due to a long-standing tax dispute with Shell, the operator of the field.
After the dispute was resolved, Shell once again invited bids for the construction of a new floating production storage and offloading (FPSO) unit for its Bonga Southwest deepwater oil field in Nigeria.
However, the response to the tender had been underwhelming.
There has been a delay in progressing with the tendering process for the Bonga Southwest field. The tenders have been put on hold till around 2024.
The contract award for the construction of the 150,000 b/d Bonga Southwest FPSO had been put on hold.
The delays could be related to a change in Shell’s upstream strategy as part of its net zero ambitions, though Weli maintained that the company is looking some economic variable to restart the field development.
Shell is Nigeria’s biggest oil producer, but relations have soured in recent years due to commercial and security issues.
Weli, said insecurity and third party breach of assets is affecting the company’s operations.
Oriental News Nigeria recalls that in May 2021, Shell CEO Ben van Beurden told investors the company was focusing more on its Nigerian deepwater and gas assets after it deemed its onshore oil portfolio in Nigeria “no longer compatible” with its strategic ambitions, which include a focus on climate change and net zero carbon strategy. The energy major is currently in talks with the government to sell at its onshore oil assets.
Bonga, Nigeria’s first deepwater oil field, currently has the capacity to produce 225,000 b/d of crude oil and 150 MMcf/d of gas which feeds the Nigeria Liquefied Natural Gas (NLNG) plant at Bonny.
Developing Bonga Southwest was set to add around 1 billion barrels to Nigeria’s oil reserves. Shell had previously said it would develop the Bonga Southwest project across three phases with a total potential yield of 3.2 billion barrels.
Output from the field was one of the projects Nigeria was banking on to raise production to around 3 million b/d by 2023, NNPC officials said.
Nigeria, which produces high quality light sweet crude oil, has seen its production slump to multi-decade lows, due to operational, technical and sabotage issues.
Nigeria has the capacity to pump around 2.2 million b/d of crude and condensate, but in 2021 output languished near 1.55 million b/d, according to Platts estimates.
Developing the Bonga Southwest would cost $10 billion, according to estimates by the NNPC, the concessionaire of the field.
The bulk of Bonga Southwest’s resources are located in OML 118, but it also extends into OMLs 132 and 140, operated by US major Chevron, where it is called Aparo. Other partners in the project are France’s TotalEnergies and Italy’s Eni
Weli, said the operating environment is highly challenging but it is investing in technology for asset management and integrity.
He acknowledged it was difficult to operate in the Niger Delta, periodically punctured by conflict and its attempts at community development had been less than perfect.
Last year Shell produced over 900,000 of its four million barrels a day of total oil and gas output in Nigeria, and although about a third of the oil giant’s recent downgrade of reserves was there, the country remains vital.
Controversy over Shell’s impact on the community and the environment in the Niger Delta, the oil-rich south of the country, has raged for years.
Determined efforts by the company to throw off its image as environmental despoiler and supporter of corrupt regimes have failed to deflect criticism of its conduct there, especially in the early 1990s.
SOURCE: orientalnewsng.com