Erha North Phase II, a deepwater field operated by ExxonMobil Joint Venture is expected to deliver an additional peak production of 65,000 barrels per day (B/D), of crude to Nigeria.
Prudence execution of the project is bringing a significant cost savings of about $400 million under budget to government, even the project is coming on stream five months earlier.
It was 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.
Also, vandalism and community unrest have resulted in significant production losses which dealth a major blow to the company’s earning and investment in the last few years.
Leadership gathered that Exxonmobil like other International Oil Companies operating in the country significantly scaled down operations, limited new hire opportunities, reduced personnel, project deferments, contract renegotiations.
However, despite seeming challenges, the oil giant is moving up with the development of its Owowo Oil field.
The field is projected to hold over 1billion barrels of crude oil reserves which would have significant positive impact on national economy, boost employment opportunities for Nigerians and increase national revenue if the right regulatory and operating environment is in place.
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.
Similarly, Nigeria’s oil dependence hurting banks, as the Head of Energy Research, Ecobank, Mr Dolapo Oni, has said that Nigeria’s oil dependence is severely hurting banks in the country.
Oni, who spoke weekend at a seminar organized by Association of Energy Correspondents of Nigeria in Lagos, said the development was responsible why most banks in the country are stressed up and couldn’t advanced loans to oil and gas industry.
According to him, oil l and gas loans rose to 28.78% of total loans and advances by June 2016, compared to 23.78% in June 2015 and 24.82% in Dec 2015.
He said: “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 Dec 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 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 must be passed into law, regulatory environment should be strengthened, strong fiscal terms and incorporation of joint ventures must be ensured.