Royal Dutch Shell Group .com Shell Makes New Oil Discovery in Bonga Field ( 22 March 05


This Day (Lagos) 

Mike Oduniyi And Onyebuchi Ezigbo



Shell yesterday announced fresh discovery of a significant volume of crude oil in the Bonga deep offshore field, which is expected to further boost Nigeria's reserves presently put at 35 billion barrels.


The Federal Government has, however, urged oil companies prospecting for hydrocarbon in the deepwater, to speed up exploration work in the fields thereby reducing the gestation period for the projects.


Speaking at the opening of the 2005 Offshore West Africa Conference (OWA) in Abuja, Managing Director of Shell Nigeria Exploration and Production Company (SNEPCO) Mr. Chima Ibeneche, said the new discoveries in the Bonga field would go a long way in mitigating the possible impact of the huge cost incurred in developing the field.


The oil discoveries were made in Bonga South-west, Bonga North-west and Bonga Nodes. Ibenechi who did not, however, give the estimate of reserves contained in the new fields, said that subsurface studies were continuing in parallel with the on going development of the Bonga field.


The first Bonga field, which was discovered in 1995, is said to hold over 600 million barrels of oil reserve. The field is currently being developed at the cost of $3.5 billion (N465.5 billion) and is expected to raise Nigeria's oil production capacity by 10 percent when it comes on stream.


The SNEPCO boss said the company aimed to produce the first oil from the field by mid this year, which could, however, be delayed by a month or two.


He said that Shell had used the opportunity of executing the Bonga project to substantially develop in-country capacity as well as growth in Nigerian content and technology transfer.


According to him, SNEPCO has used the integration process of the Bonga Floating Produc-tion, Storage and Offloading (FPSO) vessel to engage more Nigerian contractors, thereby raising the total man-hour target for local content to 2.1 million from the 1.3 million man-hours.


Ibenechi also re-iterated the oil industry opposition to the review of the existing Production Sharing Contract (PSC) law, which seeks to raise the Petroleum Profit Tax applicable to deepwater agreements from 50 to 85 percent.


Such proposal, he said, "would send signals such as would severely jeopardise prospects for future investment in general and stunt if not effectively stall growth in the deepwater oil and gas industry at this most critical time.


"Attempting to align the onshore and deepwater tax rates overlooks the considerable disparity in the cost and risk structure obtainable in the different areas in a most flawed manner," he added.


He said any action perceived to threaten the sanctity of Nigerian contracts would do further harm to the attractiveness of Nigeria for investments, adding that this would be clearly undesirable.


"Not only would passage of such a bill imply that government is reneging on existing agreements and eroding the trust, but it would also render new projects unsustainable and liable to termination." He noted that the multinationals were already operating in a difficult environment with the socio-economic challenges thrown-up by well known ethnic crises and issues of criminality in the Niger Delta.


Also speaking at the event, the Managing Director and Chief Executive Officer of Total Upstream Companies in Nigeria, Mr. Jaques Marraud des Grottes, said that the industry needed stability in the economic and legal environment.


According to Grottes, long term focus is a key characteristic of the oil industry, adding that the Nigerian government must therefore, share with the operators long term vision to allow the industry "to meet the challenging objectives set by the government for 2010 in terms of oil and gas reserves and production."


The Federal Government has, however, urged the oil companies to speed up work in the deepwater region and deliver the much expected reserves and production from the region.


The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Engineer Funso Kupolokun, who made this known while declaring open the OWA Conference, said of the 13 fields discovered so far in the deep offshore, only one has so far been put into production.


Kupolokun noted that although discoveries in the region so far had yielded a total of six billion barrels of crude oil, and 12 trillion cubic feet of natural gas, "it has not been success stories for all well drilled in the deep waters."


"Therefore, there is need for thorough assessment of technologies and techniques employed so far, with a view to strengthening them in order to improve the success ratio," he said.


He also called on operators in the region to ensure significant reduction in the gestation period for ventures in the region from the current world average of about five to seven years.


"This would require an overall improvement in technology and contracting strategy," Kupolokun added.


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