Global Energy Review

West Africa: Prospects for Oil and Gas

A Report by Dr Paul McDonald
Consulting Editor, Oil and Energy Trends

Contents

List of Tables

Introduction

West Africa contains less than 4% of the world's proven oil reserves but accounts for just over 6% of global output of crude oil and NGL. It is of particular significance to the international oil industry, however, in that it contains four countries where output is expected to increase. These countries are:

West African countries have attracted large amounts of upstream investment from the international oil industry. Two of the countries - Angola and Nigeria - produce over 1 mn bpd each and have considerable potential to increase their output. Equatorial Guinea and Ivory Coast are expected to show reasonable gains from a much lower base. Chad was once also forecast to provide significant gains in output, but its production has recently gone into decline following major disagreements between the government and its foreign oil industry partners.

The region is also well-endowed with natural gas and contains the world's seventh-largest exporter of LNG, Nigeria. Its proven reserves constitute 3% of the world's total. Commercial production outside Nigeria, however, is very low. Much of West Africa's gas is flared or reinjected into oil reservoirs. There is considerable potential for commercial production of natural gas if markets can be developed. Nigeria has progressed furthest with this, having LNG exports already and being in the process of developing markets in neighbouring countries through the development of a gas transmission system.

Oil and gas developments in West Africa carry a considerable amount of political risk. Relations between international oil companies and West African governments have not always proved easy, as in the case of Chad. In Nigeria, the oil companies have come under fierce attack from the inhabitants of the main oil- and gas-producing areas for what is seen as their collusion with the federal government in diverting oil revenues away from the producing regions to other parts of Nigeria, notably the Muslim north. In recent years, these protests from the largely non-Muslim south-east have spilled over into violence, leading to the kidnapping and even deaths of foreign oil workers. Some international oil firms have been forced to shut-in production and plans to increase the production of oil and gas have been delayed.

Oil

Reserves & Production

With proven oil and NGL reserves of 48.8 bn bbl (see Table 1), West Africa accounts for just under 4% of the world total. Of these 48.8 bn bbl, however, some 35.9 bn bbl, or nearly 74%, lie in Nigeria. Angola has some 5.4 bn bbl, corresponding to just over 11%, leaving the remaining 7.5 bn bbl, or 15%, spread amongst the following countries: Cameroon, Chad, Congo (formerly Zaïre), Congo-Brazzaville, Equatorial Guinea, Gabon and Ivory Coast.

Table 1
West Africa: Oil Reserves, 2006
Country Proven Reserves
(bn bbl)
Angola 5.4
Cameroon 0.4
Chad 1.5
Congo 0.2
Congo-Brazzaville 1.5
Equatorial Guinea 1.1*
Gabon 2.5
Ivory Coast 0.1
Nigeria 35.9
Total 48.8†
* GER estimate
† Including countries not listed separately
Totals rounded
Source: Oil & Gas Journal

The region's crude oil and NGL production is similarly concentrated in Nigeria-with an output of 2.6 mbd, or 51% of the regional total-and Angola, whose 1.3 mbd production accounts for 25% of regional production. The remaining seven countries produce some 1.2 mn bpd, equivalent to 24% of the total (see Table 2).

Table 2
West Africa: Oil Production, 2006
Country Production
(th bpd)
Angola 1,300
Cameroon 80
Chad 170
Congo 25
Congo-Brazzaville 260
Equatorial Guinea 360
Gabon 235
Ivory Coast 45
Nigeria 2,595
Total 5,100†
* Crude + NGL
† Including countries not listed separately
Totals rounded
Source: GER estimate

At current levels of production, the nine oil-producing countries of West Africa have some 26 years of reserves remaining, based on their existing levels of proven reserves. Nigeria has just over 38 years, while Angola has only 11, on the reserves' total of 5.4 bn bbl, estimated by the Oil & Gas Journal. BP's Statistical Review of World Energy, 2006, gives a higher total, amounting to 9.0 bn bbl, which would give a reserves:production ratio of nearly 19:1, using the output figures in Table 2. Of the remaining seven countries, Gabon has the highest ratio, amounting to 29:1 (see Table 3).

Table 3
West Africa: Oil Reserves:Production Ratios, 2006
Country Reserves:Production Ratio*
Angola 11:1
Cameroon 14:1
Chad 24:1
Congo 22:1
Congo-Brazzaville 16:1
Equatorial Guinea 8:1
Gabon 29:1
Ivory Coast 6:1
Nigeria 39:1
Total 26:1
* Based on figures given in Tables 1 & 2
Totals rounded
Source: Tables 1 & 2

   

Production Prospects

The region has attracted considerable attention from foreign companies, several of which assess reserves levels more highly than does the Oil & Gas Journal. BP's Statistical Review of World Energy, 2006 gives higher totals for both Angola and Congo-Brazzaville. The figure for Equatorial Guinea given in Table 1 may also be an underestimate.

West Africa contains one fairly new oil producer - Chad - which began production in 2003. Of the nine producing-countries in the region, four or five are expected to increase their production in future. The output proposals for all nine may be summarized as follows:

There are a few non-producing countries that are attracting attention from international oil companies. Some of these may begin to produce oil within the next decade. The most prospective of these countries appear to be:

The prospects for each of these countries are considered in the following sections.

Countries in Decline

The following countries are in long term decline:

Cameroon

Cameroon's reserves of 400 mn bbl and production of 80,000 bpd must both be accounted modest, as must its reserves:production ratio of 14:1. Its production of oil has been in continuous decline since 1997, when it stood at 125,000 bpd.

There appears little prospect of a recovery in output despite the government's attempts to encourage foreign exploration activity. Any new discoveries are expected to come from the Logone Birni and Douala Basins, which are largely unexplored.

Further discoveries will do little more than slow down the rate of decline in Cameroon's production. Assuming one or two new developments, it might well be producing between 30,000 and 50,000 bpd by 2015.

Congo (formerly Zaïre)

The Congo is West Africa's smallest producer, with output of only 25,000 bpd and reserves of 200 mn bbl. Years of war have helped to keep outside investment interest low. Output has declined since 1996, when it was 30,000 bpd. By 2015, it is likely to be negligible or have ceased altogether.

Gabon

Gabon was once an important West African producer and a member of OPEC. Output peaked in 1996 at 365,000 bpd, since when it has declined to 235,000 bpd. On the other hand, it has the best reserves:production ratio of any producer in the region with the exception of Nigeria. Output looks set to go on declining, perhaps to about 150,000 bpd by 2015.

Countries that have reversed their Decline

There is just one country in this category.

Congo-Brazzaville

Congo-Brazzaville's production peaked at 295,000 bpd in 1999 and fell to 240,000 bpd in 2004. Since then, production has revived slightly to 260,000 bpd.

This revival could continue in a modest way thanks to new finds at M'Boundi and Moho-Bilondo. Production from these fields should partly offset the decline from Congo-Brazzaville's older fields. Some 150,000 bpd of new production is scheduled to be commissioned by 2008. This could provide a temporary boost to output but Congo-Brazzaville's long term decline looks likely to resume before 2015, by which time it should be producing around 200,000 bpd.

Countries where Output is increasing

Countries where output is increasing and expected to go on rising are:

Angola

Angola's output has already increased since 2005, when it produced about 1.3 mn bpd. The field developments currently under way should more than offset the expected decline from the older fields of Cabinda, Palanca, Quito and Xikomba. Among the planned developments are Dalia, Blocks 18 & 31, Pazflor and a possible ultra-deepwater development by Total in Block 32. Oil production should go on rising to 2010, when it should be near 2.5 mn bpd. Thereafter there could be a dip in output as the number of new field developments falls. By 2015, however, output could be in the region of 2.4 mn bpd, assuming Block 32 is by then in operation.

Hyper-link:

Equatorial Guinea

Equatorial Guinea has promising offshore acreage and production has risen from less than 20,000 bpd in 1996 to 360,000 bpd in 2005. Increasing condensate production could add a further 60,000 bpd this year, but the country appears to be more gas-prone than oil-rich. A new field - the 60,000 bpd Okume development - is due on-stream in 2007. Chad's oil production is unlikely to exceed 500,000 bpd and will probably be in decline by 2015 unless a further large discovery is made, though with further small discoveries it could be in the region of 300,000 bpd.

Hyper-link:

Ivory Coast

With output of 45,000 bpd in 2005, Ivory Coast is a minor producer. Its reserves are also correspondingly small. Rising production from the Baobab field could help to push output above 60,000 bpd in 2006. Peak production looks likely to be around 100,000 bpd and output could well be in decline by 2015 and back below 45,000 bpd.

Nigeria

Nigeria has recently raised its reserve estimates by nearly 50% to 35.9 bn bbl (see Table 1) and has plans to raise this to 40.0 bn bbl by 2010. There has been considerable upstream activity in Nigeria, much of it by foreign oil companies. Nigeria's problems lie not in its reserve levels but in the social and political unrest in the main oil-producing areas, which has frequently spilled over into violence and delayed several field developments.

OET ARCHIVE:

'Nigeria struggles to expand oil industry' Focus Feb06

'Doubts cloud Nigeria's production outlook' Looking Ahead Jul05

'Nigeria struggles with tensions over oil' Looking Ahead Nov04

These delays, coupled with disagreements between the government and some foreign oil companies over upstream contract terms, threaten plans both to find new reserves and to raise production by 1.4 mn bpd to 4.0 mn bpd. There is also some doubt whether the deeper parts of the continental shelf contain as much oil as has been estimated. If the deepwater fields are to be exploited successfully, Nigeria will have to improve its attractiveness to large international oil companies, since they alone have the funds and the expertise to develop these fields.

With large scale international involvement and an end to the unrest in the Delta region, which is the country's largest producing area, Nigeria might eventually achieve its 4 mn bpd target. Without such developments, it may not go much above 3 mn bpd between now and 2015.

Hyper-links:

Countries with uncertain Prospects

There is one country in this category.

Chad

Chad was once considered a most promising oil prospect until a dispute broke out between the government and a foreign consortium consisting of ExxonMobil, Petronas and Chevron, which is responsible for Chad's oil production. The government alleges under-payment of taxes by the oil companies. On the other hand, the government is accused by the World Bank of failing to ensure that oil revenues were properly invested in alleviating poverty and improving the economic infrastructure. The World Bank helped to finance the development of Chad's oilfields and the 1,070-mile export pipeline to Kribi on the Gulf of Guinea. Chad first began producing oil in 2003.

The dispute has not exactly helped Chad's prospects as an oil producer. A further problem has arisen, however, which threatens future levels of output. The main producing area, known as Doba Basin, contains more water in its reservoir structures than was originally expected. Output in 2005, at 170,000 bpd, is 60,000 bpd, or 26% lower than planned. Production in 2006 has continued at disappointing levels for what have been described as 'technical' reasons.

The foreign consortium brought a new field, Moundouli, on-stream in 2006 and announced plans to drill another one, Maikeri, in 2007. Another basin, Lake Chad, is thought to be prospective and capable of providing commercial quantities of oil. Despite this, the outlook for Chadian production remains uncertain. It seems unlikely that Chad will be producing much above 200,000 bpd in 2015.

OET ARCHIVE:

'Chad struggles to meet targets', Looking Ahead Nov06

Countries that may produce Oil by 2015

There are two countries in West Africa that might begin producing oil between now and 2015. They are:

Niger

Niger is attracting interest from Asian companies and Algeria's Sonatrach. Petronas has already discovered oil, though reserves are thought to be modest. Output in 2015 is unlikely to exceed 100,000 bpd.

Sao Tome e Principe

Considerable optimism has been expressed for the continental shelf surrounding Sao Tome e Principe. Development has been delayed, however, by arguments over upstream terms and the need to agree offshore boundaries. Some foreign companies have dropped out. Production-sharing contracts are currently being negotiated for an area shared with Nigeria, known as the Joint Development Zone. Some of the companies involved in recent licensing rounds have lacked the necessary offshore experience to operate in this area. There could nevertheless be some production - up to 300,000 bpd - by 2015.

Outlook for Oil Production to 2015

West African oil production should show a net gain by 2015 thanks to growth in six of the nine oil producers and the start of oil production in two more countries. A complete forecast is given in Table 4.

Table 4
West Africa: Oil Production 2005 and 2015
Country Production
(th bpd)
2005 2015 Change
Angola 1,300 2,400 1,100
Cameroon 80 40 (40)
Chad 170 200 30
Congo 25 * (25)
Congo-Brazzaville 260 200 (60)
Equatorial Guinea 360 300 (60)
Gabon 235 150 (85)
Ivory Coast 45 40 (5)
Nigeria 2,595 4,000 1,405
Niger * 100 100
Sao Tome e Principe * 300 300
Total 5,100† 7,730† 2,630†
* Zero or negligible
† Including countries not listed separately
Totals rounded
Source: GER estimate

The largest increase (1.4 mn bpd) is forecast to come from Nigeria. Its ability to reach the predicted level of 4.0 mn bpd will depend principally on the country's ability to end the unrest in its oil-producing regions. Without the pacification of the Delta region, foreign oil companies may very well delay or cancel planned expansion programmes. If this were to happen Nigerian production might be nearer 3.0 mn bpd in 2015.

Angola remains a highly attractive upstream prospect and may even exceed the forecast growth of 1.1 mn bpd by 2010. Gains from other countries are expected to be small. Chad's output could even fail to grow by the expected 30,000 bpd if further disputes arise between the government and its foreign production partners.

Output levels for Niger and Sao Tome e Principe for 2015 must be considered somewhat theoretical since there is no production in either country at present and no firm timetable for future developments. Of the two, Sao Tome e Principe appears the more prospective for oil, though it is something of an exaggeration to say - as some consultants have - that it may be thought of as 'the new Kuwait'.

With all these considerations in mind, it is possible to think of West African production around 7.7 mn bpd in 2015: a rise of 2.6 mn bpd, or just over 50%. This figure of 7.7 mn bpd should nevertheless be considered as a 'best case scenario' assuming, as it does, that major political problems in Nigeria, Chad and elsewhere, will be satisfactorily resolved.

In the event that these problems are not solved or that further ones arise, then the forecasts presented in Table 4 may need to be revised downwards by 1.0 mn bpd or more. The biggest numerical uncertainty exists over Nigeria, which accounts for nearly all the 1 million-plus bpd of uncertainty described above.

The future could nevertheless be bright for the region given the right political circumstances. Moreover, by 2015, there could even be interest in certain other countries not listed in Table 4, notably Namibia and the Canary Islands, not to mention in several unexplored parts of the Gulf of Guinea.

Natural Gas

Reserves and Production

West Africa contains impressive reserves of natural gas but little commercial production outside Nigeria. Large quantities of gas are flared. In some cases, gas is reinjected into oil reservoirs in order to maintain pressure levels. In a few cases, it is used to generate electricity. There are plans to increase its use in power generation in an attempt to stimulate gas production in various parts of the region.

OET ARCHIVE:

'West Africa plans ambitious Gas-to-Power Programme', Focus Nov06

Table 5
West Africa: Proven Gas Reserves, 2006
Country Reserves
(trillion cf)
Angola 1.6
Cameroon 3.9
Congo-Brazzaville 3.2
Equatorial Guinea 1.3
Gabon 1.2
Ivory Coast 1.0
Nigeria 184.7
Total 197.8†
† Including countries not listed separately
Totals rounded
Source: Oil & Gas Journal

Some 93% of West Africa's proven reserves of natural gas lie in Nigeria. This proportion looks set to diminish, however, as other countries undertake large scale exploration programmes. Angola's unexplored regions are thought to be particularly prospective and estimates of likely finds range from about 10-25 trillion cf.

Commercial production of natural gas in West Africa is estimated at 2.3 bn cfd, of which 2.1 bn cfd comes from Nigeria. Over half of Nigeria's production is exported as LNG. Most of the rest is reinjected. Large quantities are still flared, though the government is trying to reduce this. On current production levels, Nigeria's gas reserves are sufficient to last for more than 100 years, as are those of the rest of West Africa. The increase of commercial production should reduce these reserves:production ratios considerably across the region.

Nigeria

Nigeria's policy is to increase the export of LNG and to develop an integrated gas grid serving electricity generating stations and other large users in Nigeria and in neighbouring countries.

LNG

Nigeria exported 1.1 bn cfd of LNG in 2005, according to figures compiled by Cedigaz (see Table 6). These figures, however, underestimate the total volumes exported since they take no account of spot sales and other quantities delivered over-and-above contracted levels.

Table 6
Nigeria: LNG Exports, 2005
Destination Volume*
(mn cfd)
Europe
Spain 484
France 406
Portugal 153
Turkey 100
Total Europe 1,142
North America
US 22
Total North America 22
Total World 1,164
Totals rounded
* Contract volumes only
Source: BP Statistical Review of World Energy, 2006; Cedigaz

Nigeria has LNG export capacity of 2.3 bn cfd at its Bonny Island terminal. There are plans to increase this considerably with the development of several more export schemes (see Table 7).

Table 7
Nigeria: Present and Future LNG Export Capacity
Terminal Capacity Completion
(bn cfd)
Present Terminals
     Nigeria LNG/Bonny
          Trains 1-5 2.3 In Operation
     Total 2.3
Proposed Terminals
     Nigeria LNG/Bonny
          Train 6 0.7 2007
     Brass LNG
          Trains 1-2 1.3 2009
     OK LNG/Olokola
          Trains 1-4 2.9 2010
     Bonny LNG
          N/A 2.8* 2009
Total 7.7
* Unconfirmed
N/A Not available
Totals rounded
Completion dates provisional
Source: Oil press

Under present proposals, Nigeria plans to have 7.7 bn cfd of new LNG export capacity available by 2010, giving it a total of 10.0 bn cfd, when the existing terminal at Bonny is taken into account. Nothing like this capacity is likely to be provided within such a short timescale, however, and most - if not all - the schemes listed in Table 7 for 2007 onwards are likely to be delayed.

Brass LNG suffered from the withdrawal of a major investor - Chevron - early in 2006. Its first LNG may be delayed until 2010. Some analysts have speculated that the start-up may be even later. OK LNG's commissioning has already been put back from 2009 to 2010 and could slip into 2011. Bonny LNG is reported behind its original schedule and may not open until around 2012.

The success of these schemes depends to a considerable extent on the ability of the Nigerian authorities to bring the unrest in its oil and gas-producing regions under control. Several foreign companies-which constitute a major target for protestors-are known to be uneasy about the continuing rise in violence in the Delta region. What is particularly alarming is the way the violence has spread from its original target-the oil industry-to include installations operated by foreign gas companies.

Hyper-links

Gas-to-Power

In addition to its ambitious LNG export plans, Nigeria wants to build a pipeline transmission system connecting its gasfields with potential consumers in neighbouring countries. The principal target is the power sector, and the aim is to establish an integrated gas and power grid across large parts of West Africa, consisting of gas-fired power stations linked by a new electricity grid covering the region.

The gas transmission network will be based on a trunkline known as the West African Gas Pipeline, which is to be built in stages westwards from Nigeria. It is hoped that other large gas-using customers will sign-up for supplies to supplement the volumes taken by the power generators.

OET ARCHIVE:

'West Africa plans ambitious Gas-to-Power Programme', Focus Nov 06

   

Outlook for Nigerian Gas

There is no physical reason why Nigeria should not greatly increase its present level of gas production of 2.1 bn cfd considerably. Much of the increase will be dictated by the speed at which new LNG terminals can be built. Nigeria could have more than 10.0 bn cfd of LNG and pipeline export capacity by 2015, though this figure could be considerably lower if one or more of the LNG schemes listed in Table 7 were to be further delayed or even cancelled. Much will depend on the government's ability to bring peace to its south-eastern region.

Other Gas Producers

Small amounts of gas are produced outside Nigeria, but a great deal is flared. Commercial production in the rest of West Africa looks to be in the region of 0.2 bn cfd. Several countries, however, plan to develop domestic markets for their gas and, in some cases, to export it.

The principal potential gas producers are:

Angola

Angola's proven reserves of 1.6 trillion cf are at present modest, but this figure is likely to increase sharply as exploration increases. The country's gas is at present flared, reinjected into oil reservoirs or processed for the recovery of LPG. The government plans to reduce flaring and develop a domestic market, but the main stimulus to gas exploration and production is likely to come from the possibility of exporting it as LNG.

The national oil company Sonangol, has joined BP, ExxonMobil, Total and Chevron in promoting a 0.7 bn cfd LNG export scheme. First gas is due sometime before 2011, though this timetable could slip.

Once the LNG scheme acquires a firm timetable, exploration should receive a considerable boost. Outside estimates put Angola's likely future proven reserve levels around 10 trillion cf, and some even go as high as 25 trillion cf. Everything depends, however, on the possibilities for export.

Hyper-links:

Cameroon

Cameroon has the largest proven gas reserves in West Africa outside Nigeria at present, with an estimated total of 3.9 trillion cf. More discoveries of associated gas are expected in the Kribi-Campo, Douala and Rio Del Rey Basins, but the local gas market is tiny. Gas production may nevertheless rise as a result of the development of local gas-using industries, but output is likely to remain small for the foreseeable future.

Equatorial Guinea

Equatorial Guinea's 1.3 trillion cf of reserves lie offshore, mainly in the Alba and Zafiro fields. Some are associated gas from the Zafiro oilfield, but most are found in the Alba gasfield. The total is expected to rise following the start of work on the first train of an LNG export terminal.

The LNG Project, which is led by Marathon and includes Mitsui, Marubeni and state gas company Sonagas, is due for completion in the third quarter of 2007, with an initial capacity of 0.5 bn cfd. Additions to capacity are being considered to handle gas from Equatorial Guinea and possibly from neighbouring countries.

The gas for the first stage will come from the Alba field, but the government wants associated gas that is currently flared on ExxonMobil's Zafiro oilfield to be piped to the new LNG terminal. Some 190 mn cfd of gas is flared at present, according to the country's Ministry of Mines, Industry and Energy.

Hyper-links:

Gabon has a small gas production based on its reserves of 1.2 trillion cf. Output is in the region of 0.1 bn cfd. A small local market exists, based mainly on electricity generation and some heavy industry. Some gas is also reinjected into the Rabi-Kounga oilfield. There are plans to make further use of gas in the industrial sector, but production is unlikely to rise by very much over the coming years.

Ghana

Proven reserves of 840 bn cf and plans to liberalize the country's petroleum licensing regime are beginning to arouse outside interest in both oil and gas in Ghana. Plans to reduce the share of unreliable hydro-electricity in the country's energy balance may stimulate further interest in exploration for gas, which is emerging as the fuel of choice for future electricity generating plants. Despite this, gas production is unlikely to be more than 0.1 bn cfd by 2015.

OET ARCHIVE:

'West Africa plans ambitious Gas-to-Power Programme', Focus Nov 06

   

Outlook for Natural Gas to 2015

Any increase in West Africa's gas production between now and 2015 will be driven largely by LNG exports. Nigeria will remain the largest producer and exporter but will have been joined by Equatorial Guinea as an LNG exporter by then and, possibly even by Angola.

Some 11.2 bn cfd of LNG export capacity is planned for the region by 2015 (see Table 8), though not all of it may be built by then. At least one of the proposed Nigerian schemes may be delayed beyond that date.

Table 8
West Africa: LNG Capacity, 2005 & 2015
Country Capacity
(bn cfd)
2005 2015 Change
Nigeria 2.3 10.0 7.7
Equatorial Guinea - 0.5 0.5
Angola - 0.7 0.7
Total 2.3 11.2 8.9
Totals rounded
Source: See text

Given the uncertainties expressed above, it is difficult to forecast West African gas production with any degree of accuracy. Provided the situation in Nigeria's oil and gas-producing regions does not get totally out of hand, it is likely that Nigeria will more than double its output by 2015. Production of 7.0 bn cfd appears possible. Angola and Equatorial Guinea may between them account for a further 1.2 bn cfd with perhaps a further 0.3 bn cfd from other parts of the region (see Table 9).

Table 9
West Africa: Gas Production 2005 and 2015
Country Production
(bn cfd)
2005 2015 Change
Nigeria 2.1 7.0 4.9
Angola 0.2 0.7 1.3
Equatorial Guinea 0.5
Others 0.3
Total 2.3 8.5 6.2
Source: GER Forecast

Gas to Liquids

Small amounts of liquids produced from the synthesis of natural gas in the gas-to-liquids (GTL) process may be available from West Africa by 2015. Several schemes have been proposed, notably in Nigeria.

A project to produce 34,000 bpd of GTL naphtha, diesel and LPG is under way at Escravos in Nigeria. It will use about 300 mn cfd of gas that is at present flared. The prime mover behind the Escravos project is Chevron. Other companies interested in developing GTL in Nigeria are South Africa's Sasol and Syntroleum of the US, both of which have developed processing technology for GTL.

GTL could provide a useful way of monetizing small and isolated gas deposits in the absence of any gas transmission network. Nigeria could well have production in the region of 100,000 bpd by 2015, and a similar amount may be produced elsewhere in the region by then.

OET ARCHIVE:

'Doubts attend GTL', Gas and Power Sep06

Latest Developments

Nigeria

Nigeria’s new President, Goodluck Jonathan, who took over on 6th May following the death of Umaru Yar’Adua, began his presidency with a series of initiatives designed to rescue the country’s oil industry from its present state of chaos and near-paralysis. A development plan was announced for the oil-rich Delta region, designed to channel funds to this economically neglected area and thereby reduce support for groups engaged in confronting the government and international oil companies over their neglect of the region. The state-owned Nigerian National Petroleum Corporation (NNPC) has received a new chief executive. There is also to be a Petroleum Industry Bill to reform the oil sector, and an audit of NNPC’s finances.

NNPC has signed a memorandum of understanding with the China State Construction and Engineering Corporation to build three refineries with capacities totalling 750,000 bpd and a petrochemical plant.

Violence in the oil producing regions has nevertheless not been brought under control. Damage to pipelines was reported in the Brass area and in Ogoniland, and ENI reported that it was losing 17,000 bpd of production from a pipeline in Bayelsa State as a result of theft.

Previous:

Nigeria

There was further trouble in Nigeria, where an explosion at the Brass River loading-terminal led to the suspension of 60,000 bpd of exports.

OET ARCHIVE LINK: ‘Nigeria tries again to reform oil sector’, Looking Ahead, May 10

Oil & Gas Production

OET ARCHIVE LINK: ‘Africa’s new producers attract growing interest’, Focus, April 10

Refining

OET ARCHIVE LINK: ‘Southern Africa seeks more refineries’, Looking Ahead, April 10

Nigeria

Nigeria announced that its oil and NGL production had reached 2.5 mn bpd–the highest for seven years–thanks to improving security in the Delta region: but the ink was scarcely dry on the government’s statement when it became clear that militant groups had attacked and damaged two pipelines.

Nigeria

Oli Production

Further attacks on oil pipelines and other infrastructure have been reported in Nigeria, threatening the recent revival in production and exports. The Nigerian National Petroleum Corporation warned that oil production was also being affected by a shortage of investment. One of Nigeria’s major investors, Shell, was criticized in a report by the British-based Ecumenical Council for Corporate Responsibility for its record on human rights in Nigeria and for what was described as “all too frequent oil spills, with poorly executed cleanups and unfair compensation”.

Nigeria

Oli Production

The fragile ceasefire in the Niger Delta was broken on 8th January when a pipeline belonging to Chevron was attacked, causing 200,000 bpd of production to be halted. Four days later, four employees of a Shell contractor were abducted by gunmen. International oil companies have criticized plans by the government to give the cash-strapped state-owned Nigerian National Petroleum Corporation (NNPC) a much greater role in oil production joint ventures. There was further trouble for Chevron when government troops opened fire on workers who were involved in a protest at its Escravos gas-to-liquids construction site, killing three of them.

Shell is facing claims for compensation for pollution damage in the Niger Delta. The case is to be tried in the Netherlands. Shell says the pollution was caused by sabotage to a pipeline. The plaintiffs allege it was caused by poor maintenance by Shell.

Nigeria

Rebels in Nigeria carried out what they described as a ‘warning strike’ against an oil pipeline in Rivers State in protest over the lack of progress in talks with the government following the ceasefire that was agreed on 25th October, 2009. Unrest was also reported in the oil centre of Port Harcourt. The Nigerian National Petroleum Corporation said that it was importing extra gasoline and middle distillate to make up for shortages caused by recent strikes by tanker drivers and other unrest, whilst the oil workers’ trade union, Pengassan, threatened more strike action if the government persisted with plans to break up the giant state oil corporation.

Nigeria

The Movement for the Emancipation of the Niger Delta (MEND) threatened to end the ceasefire agreed with the government in October following an attack by the Nigerian military on the home of one of its commanders. The ceasefire was meant to allow talks with the government over the lack of investment in the social and economic infrastructure in the country’s main oil-producing region. Since the ceasefire, Nigeria’s oil production has risen, topping 2.4 mn bpd in November for the first time in more than three years. Gas production has also risen. Another group, apparently unconnected with MEND, however attacked a 25,000 bpd production platform owned by Nigeria’s Conoil, in a protest against the lack of jobs in Ondo state, causing it to be shut down.

The government has said it wants to increase the taxes paid by foreign oil companies and to require them to provide third-party access to many pipelines.

Nigeria

Following the announcement of an amnesty for rebels who laid down their arms, a two month cease-fire has come into operation in the strife-torn Niger Delta, which has enabled production and exports to resume from some oilfields. Exports appear to have risen by 450,000 bpd from a low of 1.8 mn bpd in July. The cease-fire has also allowed repairs to begin on a crude pipeline that supplies refineries in the Delta region. The Port Harcourt refinery is already back on stream. Shell has also been able to repair a gas plant, allowing its output of gas and condensate to rise.

Condensate Production

OET ARCHIVE LINK: ‘OPEC plans more condensate production’, Focus, Oct 09

Nigeria

Oli Production

A lull in the fighting in the Niger Delta has enabled Nigeria to increase its exports by some 100,000 bpd, but 800,000 bpd remains shut in.

Nigeria

Oil Production and Exports

Nigeria’s oil exports have been further reduced by attacks in the Niger Delta. Production was officially reported at 1.5 mn bpd in early August, with about 2.0 mn bpd shut in.

Oil Imports

A banking crisis in Nigeria has prevented the issuing of letters of credit for some importers of refined products.

Refining

OET ARCHIVE LINK: ‘Africa plans large refinery additions’, Looking Ahead, Sep09

Nigeria

Oil Production

Nigeria’s oil exports continue to be affected by violence in the Niger Delta. The Minister of Petroleum, Rilwanu Lukman, said that Nigeria was producing at less than half of its capacity in July, which implies that about 1.5 mn bpd has been shut in. In what is seen as an escalation of the attacks, the Movement for the Emancipation of the Niger Delta hit an oil installation outside the Niger Delta, when it attacked a marine terminal in Lagos. The government has run into further trouble following a proposal to raise the royalties paid by foreign oil producers, which some claim will deter future investment in the crisis-hit country. One foreign oil producer, Shell, has attracted adverse comment from the human rights group Amnesty International for what Amnesty says is devastating pollution and poverty caused by Shell in the Niger Delta.

Nigeria

Oil Production

Nigeria suffered further attacks on its oil industry.  Production and exports were cut and there were even reports of shortages inside Nigeria.  Attacks on production facilities appear to have led to the shutting-in of 400,000 bpd of output since late-May, bringing the total volume off-line to nearly 1.4 mn bpd.  The result of this is that production is late-June was about 1.6 mn bpd: below Nigeria’s OPEC target of 1.67 mn bpd. 

Shell meanwhile has agreed to pay $15.5 mn to the families of Ogoni protestors who were executed in 1995 after they protested against oil industry activities in their homelands.

Refining

Damage to pipelines also led to the closure of two of the country’s four refineries: at Warri and Port Harcourt.  Most of the attacks continue to be by the Movement for the Emancipation of the Niger Delta.

Nigeria

Oil Production

More Nigerian production has been shut-in as a result of violence in the Delta region. Chevron has taken 100,000 bpd off-line following an attack on a pipeline at Abiteye. The crude is part of the Escravos export stream. ENI’s exports of Brass River crude were interrupted by clashes between government forces and local militias in the Warri region. Shell, however, restarted production following the repair of a pipeline at Bomu, though exports of Bonny Light continued to be restricted.

NNPC

Trades unions held demonstrations against government plans to deregulate parts of the oil industry.

Nigeria

Oil Production

Violence continues to affect the production of crude oil in Nigeria. About 100,000 bpd of Bonny Light exports were suspended following a fire on the Trans-Niger Pipeline. In a separate incident, clashes were reported between the Nigerian navy and gunmen operating from speedboats.

NNPC

The government is pressing ahead with plans to reform the state oil sector, which include restructuring the Nigerian National Petroleum Corporation into a commercial company and the sale of its shares to the general public. The state oil company will probably be split into a number of separate companies.

Nigeria

Oil Production

Shell was forced to shut-in a further 70,000 bpd of its Nigerian production following sabotage to a pipeline. Chevron shut 11,500 bpd after a similar incident affecting one of its pipelines. Plans for an oilworkers’ strike in the Niger Delta were postponed after the government agreed to step up security there.

Nigeria

Oil Production

Nigeria reported that production of its benchmark export grade crude, Bonny Light, was down to 90,000 bpd because of unrest in the Niger Delta. The field’s capacity is about 400,000 bpd. The Nigerian National Petroleum Corporation said it hoped Nigeria’s production would reach 3.8 mn bpd at the end of 2009. February’s output, though, was way below this at 2.1 mn bpd. Moreover, the Movement for the Emancipation of the Niger Delta announced in the same month that it was planning "a sweeping assault" on the country’s oil industry. Many companies started to evacuate foreign employees from vulnerable locations.

Nigeria

Oil Production

Nigerian forces reported that they had prevented an attack on an oil supply vessel off the Niger Delta, but in another incident a Romanian sailor was kidnapped in an attack on an oil tanker in the same area, and there were a number of other incidents affecting oil service vessels operating in the Delta.

Oil Production

OET ARCHIVE LINK: ‘Africa looks for more oil’, Looking Ahead, Jan09

Nigeria

Tension increased in Nigeria’s oil-producing regions when the Movement for the Emancipation of the Niger Delta (MEND) threatened to “cripple” the country’s oil industry in 2009 unless the government released rebel leader Henry Okah.  December saw further attacks on oil installations resulting in the loss of a further 82,000 bpd of production from Brass River.  By the year’s end, some 1 mn bpd of Nigerian production was reported to be off-line as a result of rebel attacks.

Nigeria’s government surprised oil companies by cutting the volume of crude supplied to refiners and awarding a large number of contracts to trading companies.  Some were awarded to Nigerian firms reported to have links to local politicians

Nigeria

Oil Production

Over 100,000 bpd of Nigerian crude production was shut-in when pipelines belonging to Shell and Chevron were attacked, bringing the total shut-in nationally to nearly 1 mn bpd.

Refining

Plans were announced by two finance companies for a 50,000 bpd refinery in Edo State in Nigeria, and an Australian natural resources company said it wanted to buy an existing refinery and expand it.

Nigeria

Nigeria continues to suffer from attacks on its oil infrastructure. A crude pipeline serving the Warri and Kaduna refineries was damaged on 2nd October, shutting both refineries. Power shortages caused the shutdown of a further refinery–the country’s largest–at Port Harcourt.

Nigeria

A pipeline belonging to Shell and ENI was bombed, though the group responsible–the Movement for the Emancipation of the Niger Delta–later said it was suspending attacks on oil installations.

The government said it was creating a new ministry to bring more economic development to the poor and neglected Delta region.

The offshore Agbami field exported its first cargo, though production was reported as only one-sixth of the planned initial output of 90,000 bpd.

The national oil company, NNPC, estimated that some 972,000 bpd of Nigeria’s production was shut-in as a result of attacks on installations.

Angola

About 200,000 bpd of exports from Angola, were cancelled during the second half of August following problems at the Greater Plutonio oilfield.

Nigeria

Nigeria’s national oil company, NNPC stated in early August that Nigeria had been forced to shut-in 1.5 mn bpd of production as a result of unrest in the Niger Delta. Some confusion, however, surrounds the precise volume of lost output. The Oil Ministry puts the figure at 650,000 bpd.

August 2008 saw further attacks on oil installations. Several federal troops were killed in clashes with the Movement for the Emancipation of the Niger Delta (MEND). Trades unions threatened action of their own over the government’s plans to phase out domestic fuel price-subsidies from the beginning of next year.

The government has estimated that Nigeria is losing some 200,000 bpd of oil to theft. In August, federal troops closed three illegal refineries in Bayelsa State that were running on stolen crude.

Nigeria

Nigerian oil workers postponed a strike after the government agreed to cut the high price of fuel sold in the country. Attacks on oil installations continued, however, as militant groups continued their protests against the activities of foreign oil companies and the government. Five foreign workers were kidnapped after an attack on an oil service vessel. Pipelines belonging to Shell and ENI were also damaged. A strike of offshore workers threatened to delay the commissioning of the 250,000 bpd Agbami field. In an attempt to relieve the pressure on energy prices at home, the government said it wanted gas companies to supply cheap gas to the domestic market, which could mean less is available for LNG schemes.

Nigeria

Nigerian exports have been hit by further violence as crude oil production falls to a new low of 1.8 mn bpd. Attacks have recently been stepped-up to include offshore oil facilities. Output may fall further unless a series of planned strikes by oil workers can be averted. One group has threatened to delay an LNG export scheme by disrupting the laying of pipelines designed to serve the Olokola LNG project. In an attempt to reduce tension in one part of the country, the government says it will replace Shell as upstream operator in Ogoniland. Shell has been criticized in Ogoniland over human rights and environmental pollution.

Nigeria

Nigerian oil production continued to be affected by violence in the Niger Delta. Shell declared force majeure on exports of Bonny Light crude for April and May following a series of attacks on its pipeline system. Strikes hit ExxonMobil’s Qua Iboe production and ENI was forced to shut-in production of Brass River after an attack on production facilities. Chevron’s production was threatened by protests from a group calling itself the Ijaw Militant Group and tension mounted late in April with the opening of the trial of two alleged members of an armed group opposed to foreign oil companies in Nigeria.

More than 300,000 bpd of crude oil production was affected by violence in April–in addition to the output already curtailed by militant activity–bringing the total volume of production affected to 1 mn bpd, according to some private government estimates.

The national oil company, NNPC, is to be investigated over oil contracts awarded between 1997 and 2007

Nigeria

Nigeria continues to be hit by unrest. Two pipelines have been set on fire: one serving the Bonny crude export terminal and another supplying the Port Harcourt refinery, Nigeria’s largest. There were protests in Ogoniland at reports that Shell was trying to resume its operations there. The Ogoni protested that oil revenues had been siphoned-off to northern Nigeria leaving them in poverty

Nigeria

The Movement for the Emancipation of the Niger Delta (MEND) has threatened reprisals against the oil industry for the alleged killing of a separatist leader by the Nigerian police (the government claims he is still alive).  Around 500,000 bpd of the country’s production is shut-in as a result of violence in the south of the country, which both stops production and delays the carrying out of repairs to damaged facilities.  The latest act of sabotage is an attack on a pipeline owned by ENI in Bayelsa state, which has led to a loss of 85,000 bpd of production.  Meanwhile, maritime workers want the seas of Nigeria declared a ‘war zone’ as a result of the high level of attacks and kidnappings carried out on offshore installations.

Nigeria

Oil Production

Oil companies struggled to restore shut-in production in Nigeria amid further threats to attack production and export facilities. Shell announced that it was increasing production at the Forcados field only for it to fall back following sabotage to a pipeline serving the export terminal. About 360,000 bpd of the 480,000 bpd Forcados-EA system was reported off-line before the pipeline attack, following which, production fell to zero according to officials in Lagos.

A number of groups representing inhabitants of the main oil-producing region announced at the start of the year that they would “paralyse” Nigeria’s oil exports.  One group claimed responsibility for an explosion on board a vessel discharging gasoline at Port Harcourt, though the government the incident was the result of “technical defects” on the ship.

LNG

Nigeria LNG’s Train 6 was commissioned in January, raising output by 535 mn cfd to 2.9 bn cfd.

Nigeria

Violence returned to the oil sector in Nigeria following the jailing of a former governor of the main oil-producing region.  One rebel group called for all organizations opposed to the federal government to “unite and cripple the oil industry in Nigeria”.  A gas pipeline supplying the Port Harcourt refinery was attacked and damaged along with a nearby oil-loading jetty.

Government proposals to reduce subsidies to the state-owned Nigerian National Petroleum Corporation (NNPC) and to end its monopoly powers in the downstream sector have been attacked by NNPC’s supporters.

Refining

OET ARCHIVE LINK: ‘Africa plans new refineries’, Looking Ahead, Nov07

Nigeria

Signs of a respite in the violence affecting Nigeria’s Delta Region appeared when estimates of the total volume of production shut-in by rebel action fell to 450,000 bpd, compared with nearly 700,000 bpd earlier in the year. Shell announced it was gradually restoring some 475,000 bpd of shut-in production at Forcados following a decline in rebel attacks, but full restoration of the field is unlikely for some time. The company is still not able, however, to say when output from the 115,000 bpd EA field can be restored despite what it sees as an improvement in security in the oil-producing areas. The field itself was attacked on 22nd October, forcing the evacuation of oil workers. Later in the month, gunmen seized six workers from a supply boat belonging to ENI.

The government has hinted that future LNG export schemes will have to demonstrate their economic viability before being approved. It wants more gas to be used domestically, particularly in electricity generation. The country suffers from chronic power shortages

Angola

Angola is expected to join OPEC’s collective output system in the near future.

Nigeria

In Nigeria, unions objected to the proposed reorganization of the national oil company NNPC (see ‘The Month in Brief’, September 2007). The country’s Oil Minister, Odein Ajumogobia, said that the aim of the move was to stamp out corruption in the oil sector. In the Niger Delta, armed men killed one foreign oil worker and kidnapped three others, bringing to an end a previously agreed cease-fire in the country’s main oil-producing region

Nigeria

Oil facilities were attacked in Nigeria during rioting in Port Harcourt. More than 70 deaths were reported. Some oil workers threatened to go on strike in protest at the continuing violence in Nigeria’s main onshore producing-area, where some 700,000 bpd of output remains shut-in as a result of the unrest that began in January 2006. Future LNG export schemes are reported threatened by the violence.

In what is seen as an attempt to restore some order into the country’s chaotic oil sector, the government has announced that it will replace the state-owned Nigerian National Petroleum Corporation (NNPC) and the Ministry of Petroleum Resources with a number of new bodies. NNPC’s functions are to be assumed by a body known as the National Oil Company.

Natural Gas

Start-up of the West African Gas Pipeline has been postponed once more, owing to attacks on the pipeline linking it to the Escravos field (see previous item). First gas is now scheduled for 2008.

Nigeria

Shell and Chevron announced the restoration of some of their Nigerian production that had taken off-line because of sabotage by militant groups in the Niger Delta, but several fields remain shut-in. The most prominent of these groups–the Movement for the Emancipation of the Niger Delta (MEND)–announced in early July that it was suspending an earlier truce. Shortly afterwards, several foreign oil workers were abducted, apparently by MEND. Nigeria’s 125,000 bpd Warri refinery–already closed by sabotage to pipelines that supply it with crude–was damaged by an explosion followed by a fire. The government has given permission for the building of Nigeria’s first privately-owned refinery: a 12,000 bpd unit in the Niger Delta, to be built by local company, Amakpe International. Another local company, Bluestar, has announced that it is to withdraw from the purchase of 51% of the state-owned Kaduna and Port Harcourt refineries following allegations of government corruption.

Nigeria

A four-day strike hit Nigeria’s already troubled oil industry as trades unions protested against rising fuel prices. The government agreed to halt price increases for the rest of 2007. Tensions remained high, however, as a leading trades union official was shot dead and militant groups continued to occupy oil installations and take foreign hostages.

A firm controlled by associates of former state president Olusegun Obasanjo, Bluestar Oil Services, bought 51% of the 110,000 bpd Kaduna refinery, giving rise to accusations of cronyism

Nigeria

Nigeria suffered further attacks on its petroleum installations. Shell was forced to shut-in 170,000 bpd of production in Ogoniland following damage to a pipeline in the Niger Delta. The incident has affected exports of Bonny Light crude, which are expected to be half their normal 310,000 bpd level in June. After further attacks in the Niger Delta some 160,000 bpd of crude oil output were shut-in from fields belonging to ENI and Chevron. By late-May over 900,000 bpd of Nigerian production was reported to be out of action as a result of sabotage or other rebel activity. The latter includes hostage-taking, which continued during May. The country was also affected by strikes by workers at the national oil company, NNPC

Nigeria

Following a turbulent election campaign, Nigeria’s President-elect, Umaru Yar’Adua declared his intention to tackle the unrest in the country’s oil-producing region of the Niger Delta. Violence and kidnappings have continued despite earlier signs of a lull in the attacks on foreign oil and gas installations. Four hostages were released in early April and Shell–the company worst affected by the unrest–announced that it was preparing to restart production amounting to nearly 500,000 bpd from its Forcados and EA fields. In the event, Shell was unable to commit to any firm timetable and trouble returned to the Delta region when around 20 foreign oil-workers were reported kidnapped in separate incidents, one of which forced Chevron to shut-in its 15,000 bpd Funiwa field. About 150 foreign workers have been reported as having been abducted since the start of the year: more than twice as many as were kidnapped in the whole of 2006. Nearly 700,000 bpd of Nigeria’s oil production is currently affected by the violence there.

WEST AFRICA

Angola

State-owned Sonangol has taken over ExxonMobil’s 36.4% shareholding in the Angola LNG project following the US company’s decision not to proceed with the scheme. Sonangol has since sold a 13.6% stake to ENI. The other shareholders are Chevron (36.4%), BP and Total (13.6% each). The project is expected to produce 667 mn cfd with first exports due in 2010.

Nigeria

There was more trouble for foreign oil companies operating in Nigeria with further violence, kidnappings and damage to installations. Shell, which had some 475,000 bpd shut-in at the beginning of March, was temporarily forced to cut production by a further 190,000 bpd when a pipeline was damaged. It was not immediately clear what had caused the problem. Around 700,000 bpd was reported shut-in across the whole of Nigeria in mid-March, including fields operated by ENI, Total and Chevron, as well as Shell, which has been hardest hit. Attempts to raise production in Nigeria are being hampered by the refusal of some oilfield service companies to work there.

Nigeria has withdrawn licences awarded to 18 mainly domestic companies to build a number of small refineries across the country after the companies failed to carry out any work. Most of Nigeria’s refining capacity is shut because of damage to equipment including sabotage to pipelines.

Nigeria

Oil

Violence continues to affect Nigeria with kidnappings of foreign oil workers and attacks on the oil production and export infrastructure. About 600,000 bpd of exports are being lost at present and two of the country's four refineries remain closed. One militant group, the Movement for the Emancipation of the Niger Delta (MEND), has threatened “a full scale war against the Nigerian government and oil companies”.

Gas Exports

First gas from the West African Gas Pipeline is due to flow in May 2007. The commissioning of the line has been delayed by five months owing to violence in the Niger Delta (see item above). Initial flows are forecast at 120 mn cfd.

Previous developments:

Equatorial Guinea

Equatorial Guinea is to study the idea of adding more trains to its LNG project. Some of the gas needed to supply the additional trains might come from Cameroon and Nigeria. The first train, with a capacity of 450 mn cfd, is due on-stream in mid-2007.

Nigeria

Violence has flared-up once more in the oil-producing regions of the Niger Delta as local groups continue their campaign to prevent oil revenues being siphoned-off to the north of the country. A spate of kidnappings of foreign oilworkers broke out in January, whilst communal violence in Nigeria’s Rivers State forced Shell to evacuate staff and shut three wells producing around 175,000 bpd of oil. Trades unions threatened strike action if the violence continued.

Meanwhile, a report from the Department of Petroleum Resources revealed that Nigeria’s four refineries operated at just 16% of their total capacity of 440,000 bpd in the fourth quarter of 2006 as a result of the unrest in the Delta and the poor quality of some of their equipment

Natural Gas

OET ARCHIVE LINK: ' West Africa plans ambitious gas-to-power program', Focus, Nov06.

Nigeria

Nigerian oil facilities suffered a series of attacks during December, beginning with a raid on the 200,000 bpd Brass crude oil export terminal and the taking of four foreign oil workers as hostages. ENI, the terminal's operator, said that loadings were not affected and the Italian company was even able to announce that it had been able to reopen its 55,000 bpd Okono/Okpoko terminal, which had been shut in November following a similar attack then. Further attacks on foreign installations followed, however, including one on the Nun River flow station in Bayelsa state, which forced Shell to shut-in 12,000 bpd of crude production, and another on Total's Obagi facility, serving the Bonny crude export terminal. Militant groups warned of further violence. The government nevertheless declared that Nigeria was on track to raise its production capacity by 0.9 mn bpd by 2010. The Christmas holiday was marked by the death of an estimated 700 Nigerians when a vandalized petrol pipeline exploded and caught fire in Lagos.

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