Interesting bit12 Jan 2013 15:52
Paul Atherton, chief financial officer at Heritage, said the new venture was expected to raise production from OML 30, located in the western delta near Warri, Delta State, from a current level of 35,000 barrels a day to 55,000 b/d in the short term by improving extraction techniques, FT reported.
But further investment could see the block, which will formally be operated by the state-controlled, crisis-prone Nigerian National Petroleum Corporation (NNPC), increase production to 150,000 b/d within three to four years, according to Atherton.
Previous attempts to reinvigorate production at OML 30, one of Nigeria’s most prolific blocks, have faltered. Production, which began in 1963, has declined sharply from a peak rate of 280,000 barrels attained in 1973.
Shell, which has long been Nigeria’s foremost foreign investor, is reorganising its interests in the country. The company has yielded handsome revenues there for decades, but it has also been implicated in environmental corruption scandals and became embroiled in the banditry that stalks the delta.
Shell sold stakes in three licences in the Niger Delta in 2010 to Seplat, which has since improved output at the fields. Shell went on to sell stakes in other licences to First Hydrocarbon Nigeria, an affiliate of London-listed Afren, and Neconde Energy, a local consortium.
Atherton argued that the security situation in the area is now stable, following an amnesty, which the government said brought more than 20,000 armed men from their bases in the Niger Delta’s creeks.
Production from OML 30 between 2006 and 2009 was severely hit by a combination of funding and security issues. Heritage said it would prevent interruptions in production by improving relations with the community and giving it a share of profits in exchange for helping to reduce vandalism.
International oil companies “have so many licences, they don’t have the capital and manpower to focus on all of their licences”, said Atherton.
With oil theft still rife in the Niger Delta and a contentious overhaul of industry legislation in the offing, some western groups are gradually selling down their Nigerian interests – particularly vulnerable onshore fields – to local operators, who in turn are forming alliances with less familiar western players or Asian groups.
Three weeks ago ConocoPhillips, the US oil group, announced it was selling its Nigerian businesses for a total of $1.79 billion to Lagos-based, Toronto-quoted Oando, one of the most ambitious local integrated energy groups. Oando will take on onshore and offshore interests delivering 43,000 barrels of oil a day.
But the challenge facing the new wave of indigenous companies, some backed by western groups, is to prove that they can turn round the long-term decline in output in Nigeria, one of the world’s largest oil producers.
Investors in Heritage will be hoping the polo-loving Karim and the swashbuc
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