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NNPC AS AN OPERATOR IN THE JOINT VENTURE ARRANGEMENT – THE NPDC PERSPECTIVE

Oil and Gas operation in Nigeria is well over 50 years. Most of the operations have been under the joint venture arrangement with several International Oil Companies (OICs) like Shell, Mobil Chevron, Agip, Total and Panocean where Nigeria has 60% equity with the exception of Shell where it has 55%. Under the Joint Venture Agreement, the IOCs are the Operators while Nigeria’s participation is limited to contributing her equity through the cashcall mechanism.

However, in pursuit of an agenda to achieve technological transfer and build local capacity for operations in the Oil and Gas Sector, the Federal Government on 12th December, 2003, presented its economic reforms agenda as it relates to the transformation of the oil and gas industry. One of the main objectives of the agenda was the quick transformation of Nigerian Petroleum Development Company (NPDC) a subsidiary of NNPC to an efficient and virile E&P Company. Achieving this required capacity building which could be enhanced with hands-on-experience by way of operation of some medium sized fields.

Towards the realization of this goal, Chevron Nigeria Limited (CNL) and Shell Petroleum Development Company (SPDC) selected the under listed fields respectively to be operated under a JV scheme in which NPDC was to become the Operator on behalf of the Joint Venture with relevant support from CNL and SPDC. Consequently, the Joint Venture Division (Comprising Shell JV & Chevron JV Departments) of NPDC was established on the 14th of April, 2004 with Dr. Funmi Coker as its pioneer Executive Director. The other appointees were Engr. S.O. Olawore as Manager Shell JV and Sir I.G. Okafor as Manager Chevron JV. Engr S.O. Olawore is the current Executive Director, JV Division.

A comprehensive legal frame work detailing the functions of the partners and mode of operations of the Joint Venture Division was signed between NNPC and Chevron Nigeria Limited/ Shell JV Operations.

Field Development Studies/Plan

In line with Environmental laws and DPR regulatory requirements, EIA for Oghareki field and Aroh field were successfully conducted.

Three wells, Aroh 1, 2 and 3 were previously drilled by CNL in Aroh field, while two wells,

Oghareki 1 & 2 were drilled in Oghareki field. Reservoir Studies were carried out on Aroh Field and Oghareki field to validate the earlier field studies carried out by CNL. The outcome of the studies shows that Aroh field has 30.39MM barrels of Oil, while Oghareki has 21.4MM barrel of Oil.

Oghareki/Okwefe Field Unitization

Oghareki field in OML 49 straddles Okwefe field in OML 38 owned by SPDC.
In order to develop Oghareki field, Unitization discussion with SPDC on all Oghareki/Okwefe straddled field stakeholders started in December 2008. Presently, the Confidentiality Agreement that will allow stakeholders to share both field data and studies has been concluded.
Further study to identify additional Oil & Gas opportunities are ongoing.

JOURNEY SO FAR - CHEVRON JV

1
Efforts are on-going to complete two wells, Aro 1 & 2 with anticipated production of 5000 – 8000 BOPD
2
Confidentiality Agreement that will allow NPDC and SPDC to share Oghareki /Okwofe (OML 38) straddled fields’ data and studies are being executed.

JOURNEY SO FAR - SHELL JV

Under the Shell Joint Venture Arrangement, NPDC has just concluded Dump flooding studies. The Egbema/ Egbema West Gas utilization and the Egbema West Gas NAG development projects are ongoing.

2010 OUTLOOK

In line with government’s aspiration on gas utilization and monetization, NPDC through the Joint Venture Fields will supply 60MMScf/d of Gas to Egbema Power Plant, install AG and NAG Treatment Plant in Egbema Fields and also prepare the site and drill two NAG Wells. In furtherance of its oil development plans, it will re-complete some wells for Dump Flooding.
As its way of giving back to its community, NPDC will carry out the rehabilitation of Egbema West Road.

KEY CHALLENGES

The anticipated progress has however been hampered by the following challenges.

1
Empowerment in line with JOA limit of authority.
2
Deployment of additional experienced staff to support the JV Operations and enhance capacity building.
3 Execution of MOUs with host communities and Provision of Sustainable Community Development Projects.

NPDC is taking giant strides in its new role as the Operator of some of the fields in the Joint

Venture arrangement. It is believed that in the near future, especially with the transformation of NNPC into a commercial entity, NPDC on behalf of the Corporation will make its mark beyond the shores of the nation.