With 4 Drill Ships Arriving Nigeria in 2025, Oil Service Firms Expect Rebound in Upstream Activities

Nigeria’s upstream oil and gas industry is set to experience a rebound in projects with potential for crude production growth and other associated values as four drill ships are expected to arrive the country by 2025, THISDAY has learnt. Many exploration and production projects in the deepwater environment have been lined up for commencement next year, which are being promoted by the International Oil Companies (IOCs) operating in Nigeria.

Currently, oil service companies under the aegis of Petroleum Technology Association of Nigeria (PETAN) are tendering for those projects as requested by the multinationals, Chairman of the group and Chief Executive Officer of Geoplex Drillteq Limited, Mr. Wole Ogunsanya, told THISDAY.
Ogunsanya, who spoke against the backdrop of falling oil production and the lack of projects to guarantee an increase in production in the near-term, stated that a lot of projects are in the pipeline that could lead to production growth.

He said the projects are in the deepwater and have a lifespan of between four to five years. He , however did not mention the specific projects.
The PETAN chair, who had lamented the falling oil production, with about 500,000 barrels per day underproduction, said that the upcoming projects are signs that the oil industry will be recording a rebound by next year.

While the multinational companies are divesting from the onshore side of the upstream sector, where the barrier of entry has come down, Ogunsanya noted that the IOCs are increasing their activities in the deepwater where they find the fiscal terms more favourable for them.
He explained: “Project is one thing, increasing production, sustaining production from existing oil fields that were already discovered is another. On the projects, there are a lot of projects coming. We are aware of it because they (IOCs) are coming to us. We are tendering.
“Next year, we are going to have about four drill ships coming in. These are deepwater projects that will start next year by a number of the multinational companies.

“The truth is that the multinational companies, as they are divesting from the onshore side (land, swamp, shallow waters) where the barrier of entry has come down, they are increasing their activities in the deepwater because the terms are more favourable for them.
“We have Production Sharing Contracts (PSCs) where for every dollar they spend, they are going to take that dollar from the oil. So, a lot of them are coming next year. We have projects that will last four to five years coming up from 2025”.
However, on the side which borders on increasing oil and gas production from the discovered and existing reserves, the Geoplex CEO said a lot of activities were happening around that.

He admitted that there is currently a scarcity of rigs in the swamp and land as well as in the offshore environment.
He maintained that sometimes, there is inadequate rig assets in-country to execute some of the projects.
According to him: “On both increasing production from existing reserves, we are seeing uptick, and on the deepwater end, we see a lot of activities in 2025.”

With the multinational producing companies divesting out of the onshore environment and the multinational service companies also reducing their footprints in Nigeria because of the drop in barrier of entry, Ogunsanya revealed that PETAN views that as an opportunity for the country.
He said the association is currently working out a strategic model and plan which it would discuss with the government, aimed at helping Nigeria to produce her oil independently of the IOCs.

Ogunsanya explained: “So, in that model, it’s going to involve having an asset, that PETAN companies will come and use our services at very reduced cost. “So, if a job is going to cost $1 million, if they award $1 million to GPPSL for instance, it’s going to do that job with its equipment and make a margin. GPPSL can say, if it’s PETAN that needs to do that job for $1 million, I can take half a million dollars, and when that production starts, you pay me the other half a million dollars.
“He will still get his $1 million, but he can do that job at half price. So, we want to create a model whereby PETAN companies come together and establish that model of producing oil and gas, even if it’s 5,000 to 10,000 barrels a day you start with, you can expand that.”
He added that the local service companies can deliver such projects cheaper at lower cashflow than any international company.
He reiterated that the association would be proposing that model to the government and make a case for government to partner with them.
The PETAN chair assured that members would ensure the best of the local service companies that have the capacity and the know-how to deliver the jobs with the same service quality as that of the multinational service companies.

Source: thisdaylive.com