Otakikpo JV, a joint venture of Green Energy International Ltd., Abuja, and Lekoil Ltd., London, signed definitive agreements to advance Otakikpo marginal field development in OML 11 in Nigeria’s Niger Delta.
Further to a non-binding memorandum of understanding, the Otakikpo JV has executed additional service agreements with Schlumberger which cover the comprehensive infrastructure upgrades and field management services in relation to the planned upstream drilling program (OGJ Online, July 1, 2019).
The JV has entered an infrastructure sharing and utilization agreement with Integrated Hydrocarbon Infrastructure Ltd. (IHIL), a special purpose company incorporated and owned by Green Energy Ltd. (GEIL) to build, own, operate, and maintain the shared infrastructure facilities (ISUA). IHIL will assume the role of facility operator (from its parent, GEIL) and will build, own, operate, and maintain certain flow stations, pipeline facilities, and terminal facilities to be used for crude transport. IHIL will provide certain services to the JV such as measurement, sampling, treatment, transportation, and storage of crude.
Field management services agreements with respect to overall exploration, appraisal, evaluation, exploitation, development, production, and associated activities has been entered, as well as for the provision of various well drilling and completion products and services to implement the program. The services exclude services or products relating to the development and management of the shared infrastructure.
The upstream program consists of phased drilling of up to seven new wells with project capital expenditures estimated at $110 million, of which Lekoil subsidiary Lekoil Oil and Gas Investments Ltd. (LOGL) is expected to fund $44 million. The cost estimate is about 35% lower than the July 1, 2019, estimate of $170 million ($68 million net to LOGL) due to lower oil prices and change of project scope.
Drilling of the first two wells, estimated at $25 million, is expected to increase gross production to about 10,000 bo/d from the current 5,755 bo/d gross rate. Rig mobilization is expected as soon as the JV partners have raised funding, according to their respective participating interest.
The Otakikpo JV is comprised of GEIL (operator) and LOGL (90% owned by Lekoil).