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 NIGERIA
West Africa
Oil and gas in Nigeria are produced from scores of
relatively small fields located in the inland swamps and larger fields
in the wide offshore
region of the Niger Delta.
There are about 300 fields in all. Although some are
large, most contain less than 100 million bbls of oil reserves along
with substantial quantities of associated gas. All are overseen by the
Nigerian National Petroleum Corporation (NNPC), which holds 55% or 60%
equity in the production groups.
 Just a few western oil majors operate the largest fields
producing around 95% of the oil, although the Petroleum Act is
constantly being reformed to encourage more investors. Around a third of the
oil comes from onshore fields operated by Shell although this share is
reducing as the offshore expands.
The main offshore producers are ExxonMobil and
ChevronTexaco, whilst Shell, along with Agip and Total, also own several
deep water developments. Over the last decade there has been an upsurge
in seismic and drilling activity as a result of identification of the
new deep water play in the Niger Delta.
Although oil production in Nigeria did not begin until
1958, exploration began in 1908 when a German company began drilling in
the coastal area east of Lagos. These operations were abandoned
following the outbreak of WW1. Much later in 1937 geological surveys
were carried out in the southern part of the country but these were once
again suspended following the outbreak of WW2.
Work resumed in 1947 with seismic surveys and
stratigraphic drilling. The first deep well was drilled at Ihus in the
eastern region of the country in 1951 and in 1955 a well at Oloibiri in
the onshore delta flowed oil and established Nigeria’s first commercial
field. Production started from Shell's Oloibiri and Afam Fields in 1957.
In 1964 the first offshore discovery was made on the Okan
structure, 12 kms from the coast. Production began offshore in 1965.
Most of Nigeria’s offshore oil production is produced from approximately
40 large fields but there are also around 50 smaller fields providing
the remaining output. Although the older fields are in decline some new
shallow water offshore output is being developed.
The shallow water area has few remaining drilling
opportunities but many more large fields have been discovered since 1996
in deep waters and further discoveries are expected. The Federal
Government decided in 1990 to offer deep water blocks in water depths of
up to 3,000 metres and the first deepwater bidding round was held in
January 1991.
Shell soon discovered the Bonga Field while Elf
discovered the Abo field, in late 1996/early 1997. In 1998 there was
another major discovery when Texaco drilled the Agbami Field on trend
with Bonga. A series of discoveries have since been made and besides the
Bonga project (which came onstream in 2005) other fields are due to progressively
begin producing.
Apart from the deepwater area, Nigeria has also put on
offer blocks in the Joint Development Zone between Nigeria and Sao Tome
and Principe and is entitled to 60% of future output.
Marketed gas production in Nigeria is still relatively
low compared to oil production however it is growing rapidly. The
country has very large reserves of natural gas, most of which is
associated. Many Nigerian oil fields are saturated with primary gas caps
but historically over 75% of this associated gas was flared.
Nearly all the reduction in flaring is accounted for by the LNG
plant, built at Bonny Island in Rivers State, which came onstream in
October 1999 although the Escravos gas gathering system created by
ChevronTexaco in 1997 to recover associated gas from its northern
offshore fields is the main project that has expanded, and is still
expanding, Nigeria's offshore
gas industry. Other LNG projects are planned.
Local unrest in parts of the country have led to
intermittent shut-in of output since 2003 although this has effectively
maintained Nigeria's total output within its OPEC quota. Even without
such activity the only real growth potential lies in Nigeria's deep and
ultra-deep waters.
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