Royal_Dutch_ShellThe sale of interest on oil blocks by Joint Venture Companies (JVC) has impacted their crude oil production negatively. This is revealed by the BusinessDay Oil and Gas Industry Report, yet to be released.

The report shows that JVCs which are regarded as the leaders of Nigerian oil and gas upstream in terms of crude oil production saw their production per day decline by 71 percent from 2.17Mbpd in 2003 to 1.27Mbpd in 2012 and further decline by 20 percent to 1.02Mbpd in June 2013.

The sale of oil blocks by JVCs started in 2010 by Shell with sale of interests in eight blocks with the monetary value of $1.8 billion. Chevron sold OMLs 83 and 85 which covers the Madu and Anyala oil fields and plan to sell oil mining leases (OMLs) 52, 53 and 55 in the Niger Delta.

The other company that has also announced the sale of its 20 percent stake in its Nigerian offshore acreage is Total Upstream Nigeria, which transferred its interest to China’s Sinopec for $2.5 billion (N400 billion), while Oando E&P, Nigeria’s growing indigenous upstream company, last December announced the purchase of ConocoPhillips.

According to the report, Shell planned to produce 478,000 bpd of crude oil in 2012, but the company achieved only 67 percent of its planned production. In the same vein, its production in 2012 declined by 14 percent when compared with 402,505bpd production in 2011. For Chevron, though it achieved 80 percent of planned production for 2012, its crude oil production also fell by 9 percent from 264,980 bpd in 2011 to 241,053 bpd in 2012.

It revealed further that between the period of 2003 and 2012, the JVC had lost 900,000 barrels from their daily production and 26,000 barrels between 2012 and June 2013. This was also reflected in the production of other JVCs like Total Exploration and Production, Agip , Texaco upstream and Pan-Ocean.

The decline in JVCs production was also reflected in the Nigerian oil and gas upstream production in the recent times. The industry production fell by 4 percent from 2.37 Mbpd in 2011 to 2.27Mbpd in 2012 and fell further 2.22 Mbpd in the first quarter of 2013.

The recent monthly petroleum information released by Nigerian National Petroleum Corporation (NNPC) also shows that Nigerian crude production fell from 2.22 Mbpd in the first quarter of 2013 to 2.03Mbpd in June 2013. With JVCs production fell from 1.19 Mbpd in the first quarter in 2013 to 1.02Mbpd in June 2013.

On the other hand, for production sharing contract companies, Independent and sole risk companies and Marginal field have their crude oil production increased. The PSCs also known as deepwater crude oil production per day increased by more than 1000 time from 45,805 barrels in 2003 to 877,902 barrels per day in 2012. Its 2012 production represents is peak production for the last 10 years. This success story can be attributable to world-class projects worth over $40 billion in investment into the deepwater production in 2012.

According to Oil Producers’ Trade Section (OPTS) of the Lagos Chamber of Commerce and Industry (LCCI), deepwater’s are expected to add 900,000 barrels per day to the country’ output by 2020. This implies that with the current production of 877,902 barrels per day, deepwater’s production will reach 1.78 million barrels per day by 2020 with addition of 112,500 barrels per day on yearly basis.

Independent and sole risk companies had their crude oil production increased for six consecutive years. Its production increased by 4 percent from 44.51Mbpd in 2011 to 46.25Mbpd in 2012. Between 2009 and 2010, its crude oil production increased by 1.3% as a result of additional 2.51 million barrels from Seplat Petroleum Development Company, operator of NPDC/Seplat Joint Venture.

Marginal field contribution to total industry production averaged 1% in the last ten years. The first marginal field production of 141,028 barrels in 2005 was produced by Niger Delta Petroleum Resources Limited. The coming on stream of Platform Petroleum, Midwestern Oil and Water Smith in 2008, increased their production by 192% to 2.85 million barrels in the same years.

In 2009, marginal fields crude oil production increased by 36% to 3.88 million barrels as a result of production from Pillar Oil. Between 2010 and 2012, their production increased by 339% which is the highest growth ever recorded by marginal fields operators. This change is attributed to production from Oriental Energy which accounted for 60% of the 16.70 million barrels produced by marginal fields in 2012.

 

Information from Business Day was used in this report.

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