NAPE Provides Platform for Best Practices in the Oil and Gas Industry
At the just concluded 35th Annual Conference and Exhibition of the Nigerian Association of Petroleum Explorationists (NAPE) which provided a platform to share best practices and exchanges of ideas on how to move the oil and gas industry forward, Chevron Nigeria Limited, a renowned International Oil Company (IOC) in Nigeria’s exploration space sponsored the opening ceremony. The keynote address was given by Jeffery Ewing, Chairman and Managing Director of Chevron.
The revered IOC which has been exploring oil in Nigeria over five decades welcomed the opportunity to rub minds on ways to keep the conversations of the event and to collectively proffer sustainable solutions to issues affecting the energy sector of the Nigerian economy. The conference provided an opportunity to further enhance the conversations on how to sustain reforms in the industry and maintain stability in an increasingly challenging, complex and competitive global energy environment. It also presented a unique opportunity to discuss the significant role of the oil and gas industry as a catalyst and partner for economic diversification, growth and development of the country.
On the Nigerian oil and gas business environment, Ewing expressed his candid opinion that the oil and gas industry has shown remarkable resilience in the last two years, although the issue of low oil prices persist, a phenomenon that continues to generate global socio-economic impact. Ewing added that with the fall of crude prices in 2014, the recession significantly reduced revenues, it has become evident that to be better protected from the impact of price volatility on the international market, “we must strive to do more with less and we must continue to challenge all expenditure to ensure we get maximum value for every dollar spent.” Each key player in the oil and gas industry must look inward and identify resource saving measures, efficiency and optimized operations to save costs, “the more viable our business, the more we contribute to the economy.”
Ewing made it known that amidst all these challenges and pressures, Nigeria’s oil production is recovering and it is expected to increase in the short term from 2018 to 2020. This is directly attributable to improved security in the Niger Delta, low downtime of production terminal facilities and increased drilling activities with new production facilities coming online. This is a clear demonstration of the will and commitment of the government and key stakeholders in the industry. Although, the trend is positive, there is still more to be done on all these fronts, and all stakeholders in the industry must continue to work together to ensure that these gains carry into 2018 and beyond.
The Chevron helmsman stated that significant progress has been made with regards to funding. Recent successes in Third Party Funding (TPF) for some projects have resulted in increases in production volumes. While low oil prices continue to challenge projects in the pre-FID phase, TPF allows projects with good economics to progress. It is working and it is a successful funding model. He made it clear that the efforts of the Nigerian government and “our Joint Venture (JV) partner in addressing JV cash call arrears must also be commended, as they will to stimulate growth and improve investment in the industry.”
On economic recovery, Ewing reminded stakeholders that the Nigerian government rolled out the Economic Recovery and Growth Plan (ERGP). The ERGP, a medium-term plan covering 2017 to 2020, broadly targets economic recovery, human capital development and the growth of a globally competitive economy to achieve sustained diversification and inclusiveness. The Chevron top brass opined that the incremental reform measures have started to yield results, according to the World Bank Ease of Doing Business Report 2018, which captured the performances of 190 countries across the globe, Nigeria ranked 145th, moving up 24 places. The country has also been ranked one of the top 10 most improved economies in the world. While these early successes must be acknowledged, it is imperative that the focus on every opportunity to improve efficiency, reduce waste and remain globally competitive, be retained.
Ewing advised Nigeria to continue to drive initiatives in effective utilization of the nation’s abundant gas for achieving the goal of energy security. Enact fiscal terms that encourage the development of small to mid-sized assets-reservoirs as well as non-associated gas fields. The country should establish a competitive Deepwater gas fiscal framework to support and enable ‘willing-buyer and willing-seller’ gas pricing model. Develop and communicate strategy for legacy payments for gas sold to the domestic market for power.
The Chevron MD pointed out that the industry has an opportunity in rejuvenating old frontier basin exploration, to discover impact resource additions for strategic reserves replacement and growth. These could be achieved through regional geological assessment of the Niger Delta basin; use of old data, new thinking and technology in seismic acquisition and seismic processing. Deep drilling and prospecting, as well as cost-efficient future developments. It is evident that there is significant unpenetrated and undiscovered hydrocarbon resource and reserves just below existing infrastructure. Average drill depth below mudline in the Niger Delta is approximately 10, 000 to 12, 000 feet, “we therefore need to build a robust inventory of drill ready prospect portfolio in readiness for more favourable oil price business environment.
Ewing extolled NAPE and disclosed that the association has always played a pivotal role in the cross-pollination of ideas and exchange of best practices, “we must recall that NAPE championed the discourse that helped to drive policies and reforms such as Nigerian content and marginal oil fields development.” NAPE is well positioned to encourage industry-academia collaboration for local research and development and provide a veritable platform for the articulation of ideas that will help advance the oil and gas industry and nation’s economy. According to the Chevron boss, “we have continued to sustain efforts towards delivering exploration and production projects and activities as well as making significant investments in gas projects.”
Chevron has accomplished a $1.2 billion project scope which includes drilling, major rig workovers and associated facilities. Two rigs operational for offshore and onshore projects with 32 wells drilled and completed to date. The company has significant investments in gas projects from the inception of the Nigerian Gas Master Plan through a strategic phased development for gas commercialization.
Sustained high quality gas supply to the domestic market and commitment to Nigerian government’s efforts to monetize liquid rich gas reserves. Chevron has attained reduction of routine flaring by over 90% from 2008 to 2017, with significant Nigerian content development and utilization. “We believe that diversifying the economy also entails capacity development for Nigerian businesses. At Chevron Nigeria Limited, we have helped in building the capacities of several Nigerian businesses by allocating a substantial scope of our capital projects to Nigerian companies.” Also “We do this, not just because it is required by the law, but because it is the right thing to do. In fact, we had already established CNL’s 4-pronged approach to Nigerian Content Development under our Local Community Content policy in 1999, before the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
Ewing revealed that Nigeria is set on the path of steady growth and development. The ERGP provides a framework for diversifying the Nigerian economy. The oil and gas sub-sector has and will continue to support the efforts of the government to grow the economy, but a lot more can be achieved by better utilizing existing processes and competencies, and sustaining value creation through innovative technology.
He emphasized that Chevron is proud to be partners with the Nigerian government to actualize progress in Nigeria’s oil and gas sector and it has been active in the country’s upstream energy business for over fifty years. According to the Chevron MD, “We will continue to engage in lasting, collaborative partnerships with the relevant stakeholders to effectively increase Nigeria’s global competitive edge in the energy equation.”