Nigeria is one step away from making one of the most significant discoveries in its offshore oil sector as the $21 billion Bonga Southwest/Aparo deep-water development is getting closer to Final Investment Decision.
According to the deal between Nigerian National Petroleum Company Limited (NNPC Ltd), Shell, and their international partners, the development would have a capacity of producing up to 175,000 barrels per day at full production, along with 140 million standard cubic feet of gas each day.
The discovery could be an important contributor to Nigeria’s oil output, income, and energy sector during a period when Nigeria wants to draw investments of billions of dollars.
What is the Bonga Southwest Project worth $21 billion?
The Bonga Southwest/Aparo project is an ambitious deepwater oil and gas development associated with Oil Mining Lease 118 of Nigeria.
The Nigerian National Petroleum Corporation Limited (NNPC Ltd) and its partners have signed agreements to take the project one step closer towards Final Investment Decision after the completion of the Pre-Front End Engineering Design stage.
This project is being developed amid Nigeria’s efforts to revive deepwater oil production in response to regulatory and fiscal reforms meant to make it more profitable to develop huge offshore projects.
How much oil and gas will be produced by the Bonga Southwest project?
One of the key selling points of the project is the amount of oil and gas it will be able to produce.
According to the estimates, when the project reaches its full capacity, it will be producing about 175,000 barrels of crude oil per day.
Also, the project is expected to produce approximately 140 million standard cubic feet of gas per day.
Which Companies are Involved in the Bonga Project?
The project is conducted by NNPC Ltd and a consortium of international energy companies, among which are Shell, Esso and Agip.
The involvement of Shell in the Bonga development is an illustration of the role of international companies in the deep water oil industry of Nigeria.
The current contracts aim to define a clearer way forward towards making the investment decision needed before the development could be started.
What Does the $21 Billion Investment Mean for Nigeria?
The proposed investment could have consequences that extend far beyond oil platforms.
Such a large-scale project implies conducting engineering, construction, transport, logistics and technical oil services.
This could imply opportunities for Nigerian companies in such sectors as engineering, fabrication, construction, logistics and technical services if local content obligations are fulfilled properly.
Thus, this project could give rise not only to direct employment in the oil industry, but also to indirect employment in other sectors.
Will the Project Help the Government Make More Money?
Extra oil production can earn extra money for the government through taxes, royalties and other oil revenues.
Additional export of crude can also earn foreign currency for the country at a time when Nigeria still needs to work to increase its dollar liquidity and reduce economic dependency on volatile external financing.
However, the final economic effect depends on several factors, including oil prices, project costs, production volumes, and Nigeria’s ability to earn from the development.
Why is the Bonga Project Important for Nigeria’s Oil Industry?
It has been difficult for Nigeria in recent times to continue increasing oil production due to aging facilities, oil theft, interruptions and uncertainty about major projects.
Developments like the Bonga Southwest development can change that situation.
It also means that Nigeria’s efforts to create a favorable investment environment for international oil firms seem to be working.
Getting the project to the Final Investment Decision stage is therefore crucial for Nigeria.
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