THE Oyo filed promoted by the Nigeria Agip Exploration Company and Allied Energy Plc, an indigenous oil company has finally come alive after gulping a whooping $963 million (about N143.4 billion).
Meanwhile, the Federal Government has seized the occasion to allay investors’ concerns over some of the provisions of the Petroleum Industry Bill (PIB) currently before the national assembly.
While speaking at an occasion to mark first oil, Mr. Odein Ajumogobia (SAN), Minister of State for Petroleum Resources noted that the milestone recorded by Allied Energy and its multinational partner, Agip underscores government’s policy towards increasing Nigeria’s crude oil reserves and production as well as encouraging local participation in the upstream sub-sector.
â€œIn celebrating first oil, we forget the challenges that led to first oil, the long journey, from when they started to this day. This is the first time an indigenous company is partnering with an international oil company in the deep offshore.
They must be congratulated. From the record I got from the Managing Director of Agip, they went from final investment decision to first oil in 20 months and I am told that in the industry it takes anything up to 48 months. This is really a record and it shows that the partnership between an indigenous company and a foreign company can work,â€ he noted.
Also speaking, Dr. Mahmud Yayale Ahmed, Secretary to the Government of the Federation said the challenges of the Niger Delta and quest for stable power supply is of great concern to the government.
He described the partnership between Agip and Allied Energy as unique, adding that government will continue to encourage such partnerships.
â€œThis kind of partnership is quite unique. Under two years you have succeeded in celebrating first oil. This is an achievement worthy of emulation internationally. I will like to say that we in Nigeria will continue to encourage such partnership. Nigeria is a free country, which welcomes all sorts of investments. As you venture more in such partnership we will like to appeal to those that are coming to join us because our task of building a nation is just starting,â€ he said.
Also speaking Mr. Giro Antonio Pagano, Vice Chairman and Managing Director of Agip said the company has always been involved with Federal Government’s objectives through pursuit of growth opportunities in the Nigeria’s energy sector as well as other critical areas of the economy.
Also speaking, Mr. Philip Chukwu, Group Executive Director, Exploration and Production at the Nigerian National Petroleum Corporation (NNPC) who represented the Group Managing Director observed that a few months ago Nigeria’s production dropped significantly because of problems in our areas of production, but that the recent steps taken by government has raised production by almost 30- 50 percent above of what we produced last year.
â€œMany of the companies that are operating in Nigeria today came in 1930s, 1950s and it was said that Agip came in 1962. They are still here today because our laws are such that those who want to do business in Nigeria can do that without any problem, so that is what Nigeria offers to all those who have money, who have the skills, who want to come and do business hereâ€.
On his part, Mr. Kase Lawal, Chairman of Allied Energy observed that deepwater is a difficult terrain in terms of capital and technology, noting that determined investors can always make it.
â€œWe serve as the testimony to the power of partnership, in terms of not just on paper. It is not getting an oil block and sell or getting a piece of paper or permit and sells it. Our partnership with Agip isÂ a partnership of an integrated management team both from the Agip group and CAMAC group working together day and night to be able to get where we todayâ€, he said.
It is expected that the Oyo field will initially produce 25,000 b/d of oil from two subsea wells connected to the FPSO Armada Perdana.
Sweet crude learnt that the FPSO has a treatment capacity of 40,000 barrels day of liquids, with gas treatment and re-injection facilities, and is capable of storing up to one million barrels of crude oil per day.
The associated gas will be re-injected into the Oyo field reservoir by a third well, to prevent flaring and to maximize oil recovery.
The Oyo project has achieved first oil production less than two years from sanctioning. Allied Energy and Eni hold 57.5% and 40% interests respectively, while Camac holds the remaining 2.5%.
Meanwhile International Oil Companies (IOCs) operating in Nigeria have continued to express their reservations over some of the provisions of the PIB, especially issues of taxes and royalty payment.
Their contention among others is that the aggregate impact of multiple taxes, higher royal rates and loss of incentives under the PIB, as proposed, will have significant negative impact on gas and deep water projects.
They further noted that majority of gas and deep water projects will not be viable under the PIB, as proposed.
The multinational companies also noted that certain provisions of the bill will compromise the ability of International Joint Ventures to achieve self-financing; adding that the PIB provisions on relinquishment, renewal and revocation of existing oil block licenses could amount to ‘expropriation’ and erode investor confidence in Nigeria’s respect for contracts.
These uncertainties have forced the multinational oil companies to adopt a â€œwaitÂ andÂ seeâ€ attitude on new projects. Perhaps the recent relinquishment of some oil block by Shell, Total and Agip to some indigenous players further underscores a growing predisposition towards this ‘wait and see’ attitude.
In a bid to allay these concerns earlier, Mr. Ajumogobia said government is committed to creating an enabling environment for investment in the upstream to thrive and has taken into considerations these areas of concern.
â€œNigerian government is committed to creating an environment in the oil and gas industry that is competitive and attractive.
The new PIB before the National Assembly is designed to do that. I am aware there are concerns with regards to the bill, but I assure you that government is committed to ensuring that we create an attractive and competitive environment in the oil and gas industry that will encourage development in the upstream both for foreign companies and Nigerian companies on their own and in partnership,â€ he said.
He said despite the challenges, Nigeria remains a place with lots of opportunities in the oil and gas and called on potential foreign and local investors to use the opportunities that abound in the industry.