NNPC Starts Oil Drilling in North

NNPC Starts Oil Drilling in North

In a shift from the existing pattern, the Nigerian National Petroleum Corporation (NNPC) limited on Tuesday started drilling for oil and gas at a field in northern Nigeria that has reserves estimated at 1 billion barrels.

NNPC said in a statement that phase one of the Kolmani project in the northeast would have an oil refinery, gas processing unit, 300-megawatt power plant and fertilizer plant producing 2,500 tonnes a day

The state-owned company first announced in 2019 the discovery of crude oil, gas and condensate in commercial quantity in the Kolmani area between Bauchi and Gombe states in northeastern Nigeria, a region that is battling an Islamist insurgency.

President Muhammadu Buhari said Kolmani had 1 billion barrels of oil reserves and 500 billion cubic feet of gas.

No oil major is involved in the project being developed by NNPC, local firm Sterling Global Oil and New Nigeria Development Commission, a conglomerate owned by 19 northern states. READ: Nigeria’s Public Finance Starts Falling Since 2016 –Moody’s

“It is therefore to the credit of this administration that at a time when there is near zero appetite for investment in fossil energy, coupled with the location challenges, we are able to attract investment of over $3 billion to this project,” Buhari said at a ceremony to start the oil project.

Nigeria has for years been searching for oil in frontier basins in the largely poor north of the country, including the Lake Chad Basin, the heartland of the Islamist insurgency.

Buhari urged NNPC and its partners to work with local communities and draw lessons from the restive Niger Delta, where militants have in the past blown up pipelines, accusing oil companies of neglecting locals. Oil was first discovered in the Niger Delta more than six decades ago.

Oil majors in Nigeria are divesting from onshore to focus on offshore drilling due to increasing insecurity and oil theft, which have led to a decline in production and caused Nigeria to lose its status as Africa’s top oil producer.

Export plans resurface

Details of Nigeria’s January oil export plans continued to emerge on Tuesday as offers continued to slip amid slow buying from China and Europe. Nigeria’s newly restarted Forcados crude oil stream will load 294,000 barrels per day (bpd) in January, up from 216,000 bpd in December.

Oil leakage had halted output from mid-summer until Nov. 10, halting exports of a Nigerian oil grade that was well suited to refining into scarce diesel.

Equinor offered a cargo of Pazflor loading mid-December at dated Brent minus $2.50 a barrel, down over a dollar compared to an offer a week ago. Traders said weak Chinese demand and abundant supply from competing production regions going to Europe were partly responsible for the heavy downward revisions to offers.

 India’s IOC issued a buy tender for crude loading around Jan. 10-20. The tender closes on Wednesday, with results expected on Thursday. Uruguay’s ANCAP issued a buy tender for Jan. 1-5 arrival. The tender closes on Wednesday.