NNPC: Nigeria Generates over $180bn from Deepwater Operations

Kasim Sumaina in Abuja

Nigeria’s deepwater operations have generated over $180 billion following a capital investment of more than $65billion made by the players in the oil and gas industry, the Group Managing Director, Nigerian National Petroleum Corporation (NNPC), Dr. Maikanti Baru, has said.

Baru has also revealed that despite this huge investment, there are still potentials for growth amidst untapped abundant opportunities in the sector.

He made this disclosure yesterday while delivering a paper entitled: “Deepwater Operations in Nigeria: The journey so far,” at the panel session of the Petroleum Technology Association of Nigeria (PETAN) in the ongoing golden anniversary of the Offshore Technology Conference (OTC) in Houston, Texas, United States.

Represented by the Chief Operating Officer, Upstream of the NNPC, Mallam Bello Rabiu, Baru was quoted in a statement by the corporation’s Group General Manager, Group Public Affairs Division, Mr. Ndu Ughamadu, as saying that Nigeria remained an active player relative to other regions in terms of deepwater development.

“Out of the 15 Floating Production Storage and Offloading (FPSO) units in Nigeria, seven have been deployed for deepwater operations. Nigeria ranks only behind Angola within the African deepwater operations in terms of FPSO deployment,” Baru said.
He disclosed that the country has utilised each deepwater project as an avenue to upscale its unique human capital skills in different areas not limited to engineering design, project management, welding and diving.

He added that the local content contribution or services share in deepwater has continued to grow and improve from the sub one per cent level to an aggregate contribution of over 25 per cent, from engineering man-hours of less than 20,000 to over 1.1million in recent Egina project executed by Samsung Heavy Industries for Total .

“With the Nigerian content, tonnage has grown by 600 per cent from the first deepwater project till date,” Baru added.
The NNPC helmsman stated that deepwater projects had benefited the wider Nigerian economy by boosting demand for a range of goods and services, including offshore vessels and platforms, materials, floating hotels, helicopters and manpower, as well as creating jobs and providing wide range of training and maintenance services to the industry, locally.
He added that services in areas such as manpower supply, logistics, and vessel supply, chemical supplies had more or less been domesticated in the deepwater value chain.

Baru who stated that the demonstration of this success was the in-country topside integration on the Egina FPSO project, added that this had achieved the dual goal of both industrialisation and manpower development through job creation and skills acquisition. “The gains enumerated in terms of production and reserve growth, revenue and value creation, manpower and technology development needed to be sustained. I must reiterate that sustaining these gains means all hands must be on deck. We must leverage the expected growth in deepwater for national development. We expect within the next 10 years that production from Nigeria deepwater would double,” Baru said.

He said the development implied increase in steel demand, as steel represents 20 per cent to 35 per cent of the overall cost for a new-build structure, dry docking, pipe coating, welding and sundry ancillary services, adding that Nigeria needed the right calibre of technical and engineering skills and manpower.

He urged the players in the deepwater sector to start, beginning from now, to create the linkages to the local economy, saying that the local economy must be able to deliver the growth aspirations or support adequately the demand of tomorrow.

Baru called on PETAN to fill the technology gap, stressing that OTC provided not just a window to the global oil and gas industry but also a gateway for Nigeria and the Nigerian oil industry to access the best of technology and contribute to national development.
He said NNPC would continue to support planned deepwater projects, while ensuring adequate local participation.
The oil industry expert said Nigeria had experienced phenomenal growth in deep water operations.
“At my last count, about 10 deepwater projects are lined up for sanctioning. Also, given the lead time for project maturation, the time to build is now for us to achieve the results we desire, seizing the chance to develop our Oil and Gas Industry and by extension the economy,” he said.

Baru noted that there were 87 deepwater oil blocks in Nigeria, out of which only seven are producing and additional six at different phases of development.

He stated that more than half of the blocks in deepwater Nigeria are open.
He congratulated PETAN for organising the grand event and for bringing together the oil and gas industry stakeholders from Nigeria and other climes to discuss such an enriching theme with the hope that the investors would go the extra mile to develop the industry, its businesses and the Nigerian economy, while giving value for money.