Outlook for Nigeria’s upstream oil & gas sector positive for 2023 – Hawilti report
Lagos, Nigeria – Nigeria’s oil and gas industry experienced historic crises throughout 2022 as the sector struggled with severe crude thefts and pipeline vandalism constraining output. However, resumption of operations at onshore export terminals at the end of 2022 coupled with fresh offshore drilling activity have turned the outlook positive for 2023, shows new Hawilti report.
The investment research agency has released its Nigeria Upstream Oil & Gas Report for 2023 this week, notably forecasting a recovery of onshore volumes and incremental growth coming from shallow water projects.
Onshore Recovery
The company estimates that Nigeria’s onshore production stood at only some 400,000 bopd last year, against more than 725,000 bopd in 2020. Its initial analysis forecasts a strong but not full recovery of onshore production in 2023, although it notes an uptick in drilling activity from a wide range of onshore operators.
It also notes the potential of field owners who have recently secured Petroleum Prospecting Licences (PPL) under the country’s last Marginal Fields Bidding Round to raise output. These new entrants will seek to make the best of their new 3-year licenses to start producing as soon as possible, providing they can secure the funding and technical expertise to redevelop their assets.
The report points to increased investment from onshore operators into midstream and downstream infrastructure to minimize their exposure to third-party export pipelines. “The market is witnessing a strong appetite for additional storage capacity and refining infrastructure from both large and marginal fields operators,” says Hawilti.
Shallow Water Growth
Hawilti especially notes real growth potential from Nigeria’s shallow water segment, where it highlights several brownfield and greenfield projects by operators such as General Hydrocarbons, Sunlink Energies, Oriental Energy Resources, West Africa E&P, Yinka Folawiyo Petroleum, and AMNI International that can drive output in the short and medium-term.
“Nigeria’s shallow water segment remains attractive because of its existing and reliable export infrastructure and its widely de-risked geology,” says Mickael Vogel, Director & Head of Research at Hawilti. “However, its attractiveness can also be a double-edge sword because a lot of discovered fields are sought after by stakeholders, generating strong but lengthy M&A activity that ultimately delays projects’ development.”
Deep-water Potential
Hawilti expects Nigeria’s deep-water production to remain stable throughout 2023, supported by a recently concluded infill drilling campaign by Shell on the Bonga hub and an upcoming infill drilling campaign by TotalEnergies on the Egina hub.
The deep-water outlook in Nigeria is more positive in the medium-term, with two major subsea tie-back projects currently under study and likely to be approved post-elections. These include Bonga North by Shell on OML 118 (150,000 boepd peak) and Preowei by TotalEnergies on OML 130 (70,000 boepd peak).
Segment activity is likely to be supported by the recent renewal of most producing deep-water leases in mid-2022, and the launch of a Mini Bid Round for seven deep-offshore blocks at the end of 2022.
