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D-8 Cooperation Eyes on the Potency of Nigeria’s 35 Billions Barrels Oil Reserves

Abuja, Nigeria | August 19, 2007 by D-8 Secretariat

NIGERIA'S crude oil reserves grew from 22 billion barrels in 1999 to 35 billion barrels this year as explained by Mr. Funso Kupolokun, former Group Managing Director, Nigerian National Petroleum Corporation (NNPC).

This potency according to D-8 Secretary General Dipo Alam should be considered by the economic cooperation of D-8. He indicated on Friday, when celeberating Indonesian Independent Day August 17, 2007, that an Indonesian company PT Indorama already invested a PTA factory in Nigeria, and expects more D-8 investors to take same opportunity, since oil and gas reserves of Nigeria is promising in the future. In fact, Nigeria becomes the world's seventh largest exporter of oil.

Mr. Kupolokun made the disclosure in Abuja in a 16-page valedictory speech titled, "My Journey: Traversing the Nigerian Oil and Gas Industry''. He attributed the growth to NNPC's major foray into the deep-water frontier. Kupolokun added that a full portfolio of projects had been compiled to increase the capacity to four mmb/d by 2010 to meet national aspiration. "Huge discoveries such as Bonga, Erha, and Yoho increased production capacity from 2 million barrels per day to about 3 million barrels per day,'' he said.

He listed funding, rising cost of development and production, contractor and human capacity shortages, as some of the challenges that might constrain the ability to sustain current pace of growth.

Kupolokun said NNPC had designed an innovative funding mechanism with its partners. He stressed the need for the Ministry of Finance, NNPC and Joint Venture partners to collaborate and quickly implement the scheme expeditiously. This former group managing director added that intervention efforts through the national content initiative, is aimed at increasing highly skilled labour capacity in the sector.

He said NNPC had also adopted a two-prong, focused strategy to re-awaken the hitherto dormant gas sector. One of the strategies, according him, is to position the country's gas in key export markets both regionally and internationally.
The other strategy was to catalyse the rapid growth of the domestic market by putting key commercial, legislative and physical infrastructure in place'.

Kupolokun noted that in exports, the country's position in the liquefied natural gas (LNG) had been consolidated through the NLNG. " Between 2003 and 2007, NNPC has worked with its partners to expand from three trains to five trains already, and a sixth train by 2008."The NLNG is now able to supply 22 MTPA to global markets,'' he added.

Kupolokun further said the OK-LNG and Brass LNG projects progressed significantly, and would approach the final investment decision by the first quarter of 2008. He said the completion of the projects would help to ensure the delivery of 32 MTPA by 2011.

These would collectively position the country as the second fastest LNG growing capacity in the world, the former chief executive said.

Kupolokun highlighted that NNPC's focused Greenfield LNG strategy aimed to capture a narrow window of market opportunity that was expected to mature in 2011, thereby consolidating Nigeria's market share.

According to the plan, Nigeria would, through the West African Gas Project (WAGP), deliver about 200mmscf/d of gas to Ghana, Benin and Togo by 2008.

" This is part of a concerted strategy for NNPC and Nigerian gas to penetrate the rapidly evolving regional market,'' he explained. Other regional projects under evaluation, Kupolokun added, include supply of 650 mmscf/d to Equatorial Guinea and about 2bcf/d through the Trans Sahara Gas pipeline to Algeria and Europe by 2015.

He believed that perhaps, the most profound effort has been in the development of the domestic market. "We have initiated the Nigerian Gas Master Plan, which takes a comprehensive view of the gas sector and proposes solutions that will catalyse a fast growing gas market. And through this plan, a structured sector-based framework for gas pricing was developed.''

Kupolokun said the Nigerian petroleum industry now boasts of about 6,000 wells and almost 10,000 km of pipelines onshore. The country, he noted, was also endowed with about 3,000 km offshore, in addition to 112 flow stations, six FPSOS and three FSO.

It's quite encouraging to note that, as declared by Kupolokun, from a production of 1.5 million barrels per day in 1971, the nation now has an installed capacity of about 3 million barrels per day.

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