By Toni Kan
In 2018 and just before the end of 2019, the nine oil producing states received a total sum of N942 billion as their share of the 13% derivation principle. That sum is broken down to N640.0 billion in 2018 and N302 billion (in the first 7-months) of 2019.
The oil producing states in Nigeria are Delta, Akwa-Ibom, Bayelsa, Rivers, Edo, Ondo, Imo, Abia and Lagos.
Lagos, Nigeria’s commercial heartbeat, took its place on the table in 2016 when it was officially declared an oil-producing state in Nigeria.
That honour of having its name and taking its place among the oil producing states is thanks to a little known oil company called Yinka Folawiyo Petroleum and its technical partner, Century Group Limited, who are keeping OML 113 operational, productive and profitable.
Becoming an oil producing state was such a momentous event that then Governor Akinwunmi Ambode set up a Lagos State Oil Producing Areas Community Relations Committee on November 19, 2017 during which he made the charge: “Lagos, being the home of Nigeria’s most critical commercial activities and now an oil producing state cannot afford to have any community unrests or disruption of the peace.
“It is imperative that our oil producing companies and their host communities enjoy a very warm and mutually beneficial relationship.”
OML 113 was discovered in 1997 and is located in the extreme western part of offshore Nigeria adjacent to the Benin border in what is referred to as the Benin or Dahomey Basin.
Many years before the Niger Delta became the hotbed of exploration and oil finds, the early prospects happened on the fringes of the Delta in what is now Imo state as well as far afield in Lagos.
While many people may not realize it, the first oil well drilled in Nigeria was in the Owerri area in 1951 while the first oil find in Nigeria was in Akata near Eket in 1953 but it was not in commercial quantities.
But that is not even the full story. Oil exploration began in Nigeria almost 30 years before the first commercial find. In 1903, Nigerian Bitumen Corporation began conducting exploratory work in the country but just as the first World War was starting the company’s operations were stopped.
Larger oil companies soon joined the fray because the initial smaller oil companies clearly did not possess the technological and financial resources to explore for oil in a large geographical space like Nigeria.
That was how licences were given to D’Arcy Exploration Company and Whitehall Petroleum but neither company found oil of commercial value and they returned their licenses in 1923. Darcy Exploration Company would later become Anglo-Persian Oil Company (APOC), which eventually became British Petroleum (BP).
A new license covering 920,000 square kilometres (357,000 square miles) was subsequently given to Shell D’arcy Petroleum Development Company of Nigeria, a consortium of Shell and British Petroleum (then known as Anglo-Iranian). The company began exploratory work in 1937
So if all had gone well and oil had been found at the beginning the IOCs as we know them would have been D’Arcy Exploration Company and Whitehall Petroleum instead of later entrants like Shell, Chevron, Mobil, Total, and Agip.
The big find that changed the equation would eventually happen in Oloibiri in 1956 when Shell-BP’s pursuit of commercially available petroleum yielded huge dividends. But Oloibiri was not the only significant oil well discovered at that time.
Afam and Bomu wells were also discovered in Ogoni territory. Production of crude oil did not begin until 1957 and by 1960, 847,000 tonnes of crude oil was exported making Nigeria an oil producing and exporting country.
The licence for the Aje field also contains a number of other exploration prospects. Unlike the majority of Nigerian Fields Aje has multiple oil, gas and gas condensate reservoirs in the Turonian, Cenomanian and Albian age sandstones from the 5 wells drilled so far.
The Aje field started production in April 2016 from two wells in the Cenomanian reservoir, Aje-4 and Aje-5, with oil processed and exported from a leased FPSO, the Front Puffin provided by Century group. The field under the operatorship of the Folawiyo Aje Services Ltd consortium has continued to produce from these wells to date, with Aje-4 currently producing from the Cenomanian reservoir and Aje-5 producing from a re-completion in the oil rim of the Turonian reservoir. On a net basis the Aje field produced around 350 bopd during 2018.
In 2017, a field Development Plan for Aje gas was submitted to the federal government for consideration. The FDP plan for Aje gas is built around four or five production wells in the Turonain tied back to existing and new infrastructure. This plan is significant because many analysts believe the Benin Basin is a rim of oil in a gas reservoir and could contribute significantly to the West Africa Gas pipeline.
OML 113 is, in many ways, a significant addition to the oil and gas ecosystem. One it is an offshore well and a stand-alone acreage unlike other acreages in the prolific Niger Delta region which are contiguous, awash with shallow water onshore assets and in close proximity to others allowing them to benefit from already existing facilities. This peculiar sitting of the field imposes its own logistical challenges but many of those challenges have been mediated by the partnership with the Century group whose provision of an FPSO has been a boon for the Aje field.
Century Group’s subsidiary, Century Energy Services Limited, has facilitated the Operation and Maintenance of the Front Puffin FPSO at Yinka Folawiyo Petroleum’s (YFP) OML 113 in the Benin Basin for a period of six years from 2014 to date – helping to bring and keep Lagos on the table of oil-producing states in Nigeria.