Oil: Nigeria’s newest independents produce 200,000bpd

THE divestments of international oil companies, IOCs from Nigerian assets appear to be beneficial to indigenous operators as three independents Aiteo, Eroton and Newcross, collectively produced about  200,000 barrels per day (bpd) at peak, close to the end of 2016. Aiteo Eastern Exploration and Production, the operator of the Oil Mining Lease (OML) 29, reported gross production of 92,000bpd in October 2016, figures in the Nigerian National Petroleum Corporation, NNPC’s December 2016 report showed. production shut-in Eroton Exploration and Production, in OML 18, was said to have averaged 63,764bpd gross output in the same month. There were no figures published for Newcross Petroleum Limited in October 2016 and November 2016, (the last months for which figures are officially available), but the company, operator of OML 24, delivered 30,213bpd in September 2016. These figures come to about 186,000bpd, roughly 10 percent of the country’s average 2016 production and are less than half of what the 22 Nigerian owned producers of crude oil and gas are capable of delivering. Also, five similar Nigerian independents, such as Seplat, Shoreline Natural Resources, NDWestern, Elcrest and First Hydrocarbon Nigeria, who have had up to 80 percent of their production shut-in for more than 12 months by the damage to the Trans-Forcados pipeline, were collectively producing over 160,000bpd before the bombing. Seplat and Neconde alone were averaging 115,000pbd prior to the February 14, 2016 outage. Analysts however say that Nigerian owned oil producing companies have not historically been consistent in maintaining, let alone increasing production. Conoil, which produced around 45,000bpd in 2005, and now delivers less than 10,000bpd, with four acreages, is proof of this assertion. “Poor governance is part of the challenge”, says Sam Ojehonmo, an African focused energy consultant based in Cairo, “but these new breed of operators have a different challenge; they took huge loans to buy the assets; the earlier generation had the assets largely handed over to them gratis, and they were cash flush when they had to bid for another round of acquisitions.” Aiteo, Eroton and Newcross took over their assets from the consortium of Shell, Total and Eni between 2014 and 2015, paying a total of $4.1billion for the consortium’s 45 percent share, with NNPC holding the remaining 55 percent. “We are a strategically important borrower to the Nigerian banking industry”, Chike Onyejekwe, Group Managing Director of Aiteo, said at the just concluded Nigerian Oil and Gas, NOG,  summit held in Abuja.