By Sebastine Obasi
NIGERIA’S oil production is expected to get a boost with the coming to stream of 65,000 barrels per day, bpd, Erha North Phase II, a deepwater field operated by ExxonMobil Joint Venture.
Coming up five months ahead of schedule, ExxonMobil was said to have saved about $400 million from the project. It was also gathered from industry sources that about $2 billion was extended to local investment for goods and services, thus promoting significant local content during project development. The company is also feeling the impact of current decline in oil prices which has forced a global cut back in investments, and a 75 percent reduction in JV profitability compared to 2015.
Exxonmobil like other International oil companies operating in the country significantly scaled down operations, limited new hire opportunities, reduced personnel, project deferments, contract renegotiations.
According to an industry source, the field project execution is a further demonstration of ExxonMobil’s confidence in the growth potential of the country despite shrinking investments in upstream operations.
Meanwhile, the Head of Energy Research, Ecobank, Mr Dolapo Oni, said that Nigeria’s oil dependence is severely hurting banks in the country. Oni, who stated this in Lagos, also said that the development was one of the main reasons why most banks in the country are stressed up and couldn’t advance loans to oil and gas industry. According to him, oil and gas loans rose to 28.78 percent of total loans and advances by June 2016, compared to 23.78 percent in June 2015 and 24.82 percent in Dec 2015.
’’Most banks have since adopted a cautionary stance to oil and gas loans. We could potentially see the percentage share of oil and gas loans dipped significantly in December 2016.The resumption of the Forcados pipeline, which has been down since February 2016 is a major factor that could however counter this stance as local oil companies become dollar liquid,” he said.
Giving the way forward, Oni explained that due to the constraints been faced by banks in the country, attention should be focused on International Oil Companies(IOCs),foreign Independents, private equity, foreign banks and equity investors.
He added that in order to attract investment into the oil and gas sector, the Petroleum Industry Bill, PIB, must be passed into law, regulatory environment should be strengthened, while strong fiscal terms and incorporation of joint ventures must be ensured.