Nigeria is planning to more than double its daily production by 2010, according to Presidential Advisor on Petroleum Matters Rilwanu Lukman. Lukman indicated production would rise to 5 million b/d from the current 2 million b/d, a level constrained by the production cutback agreement signed by the Organization of Petroleum Exporting Countries and some key non-OPEC nations.
Norway and Nigeria are discussing joint projects in which Nigeria can benefit from Norway's offshore experience. Speaking at a roundtable organized by an association of Norwegian oil producers, Lukman also estimated Nigerian reserves could be increased to 50 billion bbl over the next 10 years.
The advisor said the greatest challenge to increasing reserves is the need for better funding of the oil sector to encourage exploration and development, especially in promising deepwater areas. Nigeria will have to attract spending of $10 billion/year, up markedly from the current $4.5-5.5 billion.
The prolific Niger Delta has long been a hotbed of ethnic clashes, corruption, and political dissent, leading to disruption of oil production, loss of revenue, taking of hostages, and even killing of oil workers. These challenges have made many international oil companies unwilling to risk large investments in the area, despite its huge oil reserves.
With the introduction of the Niger Delta Development Commission, the Nigerian official said, the government has taken steps to contain the continuing violent crises in the Niger Delta.
Lukman added that government would also focus more on production-sharing contracts as a viable funding option. In PSCs, the oil companies fund all exploration expenses, recoup their costs after striking oil, and then share the balance of oil discovered at agreed percentages with the government. The arrangement frees the government from investing its revenues in oil exploration.
The concentration on PSCs should make the recent difficulties of the Nigerian National Petroleum Corp. in meeting cash calls by block partners a thing of the past.
Lukman said Nigeria would also improve its oil gathering and gas utilization projects with a view to increasing oil and gas revenues to $40-50 billion/year by 2010.
Statoil Pres. and CEO Olav Fjell said the emphasis on deep water by Nigeria and Norway indicates that there is room for cooperation between the two countries. Statoil already operates two oil prospecting leases in Nigeria, on which it has drilled seven successful wells and is producing one.