WEST AFRICA

Fred Akanni
Lagos

Nigeria faces claims in south and southeast

Just how far can Nigeria claim its deep offshore limits? On the southeast and south-south borders, the country is having to contend with complaints of smaller neighbors. In the southeast, Equatorial Guinea is claiming that the Oil Prospecting Lease OPL 223 in the Nigeria deep offshore extends inordinately into its territorial waters. In the south, the Islands of Sao Tom? and Pr!ncipe are contesting Nigeria's proposed extension in its ultra-deepwater area. They argue that the proposed blocks will violate their 200-mile exclusive economic zone.

Mobil, an operator in the shallow Nigerian offshore, pointed out earlier that Elf Nigeria has drilled two wells on its own acreage in Equatorial Guinea, the famous Block B, which contains the Zafiro field, the only oil producing field in Equatorial Guinea. Mobil asked Elf to consider dismantling its rig, Scarabero-4, which was drilling Ebwa in 400 meters water depth in OPL 223 as of mid-September.

Meanwhile, a new concession map drawn up by Equatorial Guinea apparently includes part of the proposed ultra-deepwater leases claimed by deep offshore Nigeria. Sao Tom? and Pr!ncipe has signed off all these leases to Mobil for preliminary technical evaluation. Mobil's advantage is that it has the first option on lease acquisition after the evaluation. The thinking in the Nigerian oil industry is that Nigeria's size grants it more goodwill and a higher leverage than the two small neighbors. With the country's new openness after five years of military dictatorship and its prospects for democracy, most analysts may be likely to support its claim.

Gabon credited for 70% of 1997 gain in global oil reserves

Gabon, the tiny coastal country hemmed in between west and central Africa (pop: 1.3 million) was responsible for 70% of the increase in the world's proved oil reserves in 1997. While worldwide total proved oil reserves increased by 1.7 billion bbl to 1,014.5 billion bbl from 1,012.8 billion bbl, Gabon's proved oil reserves increased from 1.3 billion bbl in 1996 to 2.5 billion bbl in 1997.

The figures, from Government sources, Petroconsultants, Oil and Gas Journal, as well as investigation by this magazine's West Africa unit, also reveals that Nigeria's reserves dropped from 20.8 billion bbl in 1995 to 18.5 billion bbl in 1997. Angola's reserves held steady at 5.4 billion bbl.

Nigeria's drop is a reflection of the slowdown in exploration by the majors, who complain of increasing debts owed by the Nigerian government as well as diminished incentive brought about by slashes in budget for exploration (All major companies working in Nigeria are in joint venture with state owned NNPC).

Although Angola has been in the news throughout 1996 and 1997 for its world class discoveries in the deep offshore, the finds do not show up in reserves addition because:

• Many of them are not proven reserves
• Production (to date) increased significantly from 2.7 billion bbl as of the end of 1995 to 3.2 billion bbl as of the end of 1997.

Mobil Nigeria gas export on course

• Mobil's Oso NGL project in OPL 70 is "a significant development," and Marathon's has potentially farmed-in on OPL 91. [71,797 bytes]

Mobil has commenced the production of natural gas liquids (NGLs) from its Oso NGL project in Nigeria. First cargo of products was reportedly exported out of the country last month. Production is expected to increase from about 30,000 b/d and peak at 50,000 b/d by October. The Oso field is famous for being the country's major condensate field. It's coming onstream in 1992 was heralded with much fanfare. Mobil holds a 51% interest in the joint-venture project, with the Nigerian National Petroleum (NNPC) holding the remaining 49%. Feed gas for the NGL plant comes from the condensate field and other associated gas production. The condensate field produces 110,000 b/d.

The Oso NGL project is expected to recover 350 million bbl of NGL over its life without any impact on condensate production. M. W. Scoggins, President of International Exploration and Producing for Mobil, sees the project as "a significant development" for the company's business in West Africa, enabling the American giant to continue to profitably grow production, even in the present low crude price environment.

"The Oso NGL project will make an important contribution to the monetization of Mobil's large gas resources in Nigeria," Scoggins said, for the benefit of the country's military rulers. The Oso NGL project involves two principal locations, the offshore site at the Oso field and the onshore site at the Bonny River Terminal (BRT).

Mobil is the second largest oil company operating in Nigeria, and the country's largest offshore producer. In addition to the Oso NGL project, Mobil has a 40% interest in a joint venture with NNPC, on behalf of which it operates five offshore leases. Mobil also has a 50% interest in, and operates, two deepwater blocks under production sharing contracts, covering over a million acres.

Marathon, CIPC interested in Nigeria

Houston-based independent Marathon is one of the several companies who have shown interest in farming into NPDC operated OPL 91, in the prolific southeast offshore Niger Delta. Another is China International Petroleum NPDC officials appear favorably disposed to Marathon, which they regard as "appearing very keen."

OPL 91 is well covered by 3D seismic data. NPDC, a subsidiary of state-owned NNPC is seeking a technical-cum-financing partner because it lacks the funds to explore the lease, let alone produce its only confirmed oil field. The field, Okpoho, has an estimated recoverable reserve of 15 million bbl of oil. Its been three years since NPDC has expressed the desire to work the lease with a farm-in partner, and companies such as Mobil and Chevron have shown interest. But, as a government owned company in Nigeria, NPDC is under pressure from highly placed Nigerians who are using their connections to introduce their own technical partners. The difficulty in choosing a farmee is as much political as it is technical.

Shell inviting bids for 40 wells on EA

Shell is expected to invite bids for a 40-well development drilling program on its EA Field in the OML 79 Block in the shallow water Niger river delta. The company is said to be seeking two jackups starting in mid-1999 for a two-year plus one year option contract.

Shell is planning an FPSO for the development of the field. A contract was signed earlier this summer with Samsung Shipyard in South Korea for the construction of an FPSO similar in design to one Kv?rner has designed for a Woodside Petroleum development off Australia in the Timor Sea. The Shell vessel will have a 200,000 dwt facility with a storage capacity of 1.5 million bbl that will allow for output of 100,000 b/d.

Shell anticipates production to begin about two months following startup of drilling the production wells in mid-1999. The company will also soon be issuing invitations to tender for 70 km of flowlines, two wellheads for 16 wells, and two wellheads for four wells.

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