Lagos — A research published on Friday by consultancy firm, Wood Mackenzie said three important offshore projects in Nigeria could face delay over increasing costs and uncertainties.
Delay in executive these projects- Bonga Southwest Aparo operated by Shell, Preowei, operated by Total, and ExxonMobil’s Owowo he said, could cost Nigeria 35% decline in oil output over 10 years.
Wood Mackenzie warned that although the three projects would generate more than $2 billion a year for the government at peak production, however, the companies are now investing their monies in regions with better and clearer terms.
“Nigeria is going to enter quite a steep decline in production,” said Lennert Koch, principal analyst of sub-Saharan Africa upstream with Wood Mackenzie. “In order to keep its revenue up…it needs to develop additional fields.”
Without the three fields, Koch said Nigerian production would drop 35% within a decade.
As a result, Wood Mackenzie delayed its projected startups for the deepwater projects Bonga Southwest Aparo, operated by Shell, and Preowei, operated by Total, by two years to 2027 and 2025 respectively, and for ExxonMobil’s Owowo by four years to 2029.
Together, the deepwater fields hold an estimated 1.5 billion barrels of oil, and could add 300,000 bpd of oil to Nigeria’s production, which according to the national budget, is looking to hit 3million barrels per day by 2020.
Last November, Nigeria increased its deepwater oil revenues to $1.5 billion in two years, increasing the VAT rate from 5% to 7.5%.