Despite low price era, opportunities abound in Nigeria’s oil, gas sector

Despite the falling oil price in the international market and internal challenges which include non-passage of PIB, current administration’s priorities for the oil and gas sector, non-functioning of the four local refineries, among others,  BusinessDay Research and Intelligence Unit (BRIU) discovers there are opportunities still for companies related to oil and gas sector in 2016.

With the current trend in the industry, the giants in Nigerian oil and gas plan to invest a total of $11.89 billion into the sector this year, as shown by the BRIU in its findings.

These companies include Shell Petroleum Development Company (SPDC), ExxonMobil Nigeria, Chevron Nigeria Limited (CNL), Nigerian Agip Oil Company (NAOC), and Total Exploration and Production Nigeria Limited (Total E&P).

The statistics available to BRIU show that the five analysed companies’ $11.89 billion proposed budget is 32 percent more than 2015 proposed budget of $8.99 billion and 82 percent higher than actual budget of $6.55 billion in 2015.

According to the breakdown of the budget, capital expenditure is expected to account for 59 percent of the budget, which is equivalent to $6.96 million, while the remaining 39 percent is to go into operating expenditure that is equivalent to $4.93 billion during the year under review.

Mainly, the budgetary provision from the five analysed companies covers drilling of wells, seismic processing and analysis, upgrade of terminals, development of oil and gas producing infrastructure, Independent Power Plant (IPP) and Domgas projects, Nigerian local content development and sustainable community development programmes, Environmental Protection, Safety and Security programmes.

However, a further breakdown of the budget indicates that, SPDC accounts for 30 percent of the proposed budget, which is equivalent to $3.53 billion followed by ExxonMobil with $2.60 billion, which represents 22 percent of the proposed budget. Chevron occupies the third position with total budget of $2.47 billion, indicating 21 percent of the total budget. Total E&P came forth with a total budget of $1.78 billion and Nigerian Agip Oil Company occupied the fifth position with a total budget of $1.52 billion. The investment focus of the companies are;

SPDC Nigeria

The SPDC investment of $3.53 million is made up of joint venture base exploration and production, which accounts for 64 percent of the total budget, translating to $2.24 billion; Domestic Gas and Independent Power Projects account for 21 percent, which translates to $723 million, and the remaining $563 million or 16 percent is for servicing of Modify Carry Agreement (MCA2).

On exploration and production, SPDC investment in 2016 will be focusing on preparation and drilling wells, seismic processing and analysis, upgrade works at Forcados and Bonny terminals, upgrade of oil and gas infrastructure, flow line replacements, emergency pipeline repair, etc. The company Domgas/IPP projects will include execution of FYIP PHASE 1, SSAGS STEP 1, Agbada non-associated gas, associated gas solution and for MCA2, the company investment will be in the development of Gbarau Ubie phase 2 A and B, non-associated gas facilities with associated wells.

ExxonMobil Nigeria

ExxonMobil Nigeria’s $2.6 billion investment is to focus mainly on the company joint venture exploration and production, which include East Area Project inlet gas exchanger, Ubit PP Restoration Project, Yoho FSO and Qua Iboe Terminal master plan upgrade.

Chevron Nigeria

Chevron Nigeria Limited’s $2.47 billion proposed investment breakdown shows that $847 million is set aside for exploration and production activities in 2016, $244 million for operating expenditure while the remaining $1.38 billion goes for domestic gas projects, Independent Power Projects and others projects.

Total E&P Nigeria Limited

Similarly, Total E&P budgetary provision of $1.78 billion is set aside for safety and security, environmental protection health and environment projects, Nigerian content development, facilities upgrade and sustainable community development projects.

Nigerian Agip Oil Company

The breakdown of Nigerian Agip Oil Company’s investment of $1.52 billion for the current year shows that 93 percent or $1.40 billion of the company total budget will go for joint venture base exploration and production, 5 percent or $71 million to Domestic Gas projects and 3 percent or $42 million to Independent Power Projects.

Further breakdown of the Nigerian Agip Oil Company budget shows that $80,000 of exploration and production budget is to go to productive and non-productive concession rental, $1.84 million for exploration seismic acquisition, processing and reprocessing, $0.43 million for exploration wells, $56.96 million for the development of completion and work-over wells for oil and gas, $216 million for capital construction on oil and gas infrastructure, $21 million for environmental protection, $39 million for safety and loss prevention, $7 million for movables assets, etc.

OLOWA PETER