…Emerges Nigeria’s first deep-water venture since 2013

…Extra FIDs anticipated in 2025-Verheijen

Shell Nigeria Exploration and Manufacturing Firm Restricted (SNEPCo), a subsidiary of Shell Plc’s latest $5 billion Last Funding Resolution (FID) on the Bonga North venture, has ignited optimism surrounding the multinational’s deliberate asset sale in Nigeria.

Shell stated in a press release on Monday that manufacturing will peak at about 110,000 barrels of oil per day, with 300 million barrels of oil equal recoverable from the realm. The primary oil is anticipated by the ‘finish of the last decade,’ in response to Shell.

The multi-billion-dollar deep-water funding, the primary 110,000 bpd venture FID to be taken in Nigeria for the reason that Egina subject’s FID was introduced in 2013, is seen as a optimistic step in direction of unlocking the worth of Shell’s Nigerian belongings and facilitating a clean transition to new possession.

Welligence Power Analytics, a worldwide market intelligence agency centered on the upstream oil and gasoline sector, on Monday, stated the venture can be a subsea tie-back to the present Bonga Floating Manufacturing Storage and Offloading (FPSO), which is at present working at lower than 60 % capability.

“That is Nigeria’s first deepwater FID in over a decade, following the announcement of deepwater capital incentives. Different undeveloped deepwater tasks like Preowei and Owowo might progress quickly,” Welligence stated in a be aware seen by BusinessDay.

The newly sanctioned venture entails drilling, finishing, and beginning up 16 wells (8 manufacturing, 8 water injection), modifications to the present Bonga Fundamental FPSO, and the set up of recent subsea {hardware} tied again to the FPSO.

“That is one other important funding, which can assist us to keep up secure liquids manufacturing from our advantaged Upstream portfolio,” Zoë Yujnovich, Shell’s built-in gasoline and upstream director, stated on Monday.

Olu Verheijen, President Bola Tinubu’s particular adviser on power, stated the FID on Bonga North and the FID on Ubeta earlier in 2024 reveal the efficacy of the oil and gasoline reforms and directives championed by the President.

“These tasks will set off broader investments to revolutionise Nigeria’s energy era, transportation, and manufacturing sectors. In 2025 we anticipate additional FIDs from worldwide and home gamers,” Verheijen stated.

President Tinubu has welcomed the FID by Shell and its companions for the Bonga North Deep Offshore Subject.

In keeping with a press release by Bayo Onanuga, the president’s particular adviser on data and technique, “The landmark growth” marks Nigeria’s first deepwater oil enterprise in over a decade.

He attributed the event to the impression of Tinubu’s insurance policies and reforms in drawing investments within the oil and gasoline sector.

“We designed our insurance policies and reforms from the beginning of my administration to realize this objective. Shell and its companions’ choice to put money into Bonga North affirms the success of our efforts. We’ll proceed to supply the required assist to make sure their success and the realisation of Nigeria’s power potential,” Tinubu was quoted within the assertion.

Learn additionally: Nigeria to achieve 350m barrels of oil on Shell, companions’ $5bn deep water investments – Tinubu

Oil, gasoline potential in Bonga North

The Bonga North growth is anticipated to considerably increase Nigeria’s oil manufacturing and lengthen the lifetime of the Bonga subject.

Bonga North, which at present has estimated recoverable assets of over 300mn billion of oil equal (boe), will contain drilling as much as 16 wells and can be tied again to the present 225,000 barrels per day (bpd) Bonga floating manufacturing, storage and offloading (FPSO) facility.

The FPSO handles output from the Bonga Fundamental and Bonga North West fields, which began in 2005 and 2014, respectively.

Crude manufacturing from the FPSO averaged 120,000 bpd in January-November, with output in November rising by 9 % on the month to 135,000 bpd, in response to the Nigeria Upstream Petroleum Regulatory Fee (NURPC).

Shell stated modifications to the FPSO can be required to accommodate Bonga North, however a supply instructed Argus on Monday that these will largely be restricted to the power’s topsides.

The corporate beforehand instructed Argus {that a} separate and extra thoroughgoing FPSO life-extension programme, which “will run effectively into 2029,” had been put in place as a result of the power was initially designed to function solely till 2025.

Shell’s Nigerian offshore subsidiary operates the Bonga North venture with a 55 % stake beneath a production-sharing contract with state-owned NNPC. ExxonMobil, TotalEnergies and Italy’s Eni are the opposite venture companions with 20 %, 12.5 % and 12.5 % stakes, respectively.

The Bonga fields are situated in Nigeria’s OML 118 licence at water depths exceeding 1,000m.

Along with Bonga Fundamental, Bonga North West and Bonga North, the block additionally holds the undeveloped Bonga South West oil subject, which NNPC stated can be developed in three phases. Bonga South West could have its personal separate FPSO and produce 150,000 bpd at peak between 2027 and 2031, NNPC stated.

Learn additionally: Shell takes FID on Bonga North deep-water venture

Affect on divestment deal

Shell’s choice to proceed with the Bonga North venture comes amidst regulatory hurdles and delays after agreeing to promote its Nigerian onshore enterprise to Renaissance, a consortium of 5 largely Nigerian firms, after years of spills and theft.

Early this 12 months Shell, which has been pumping oil in Nigeria for almost seven many years, agreed to promote its onshore subsidiary to a consortium of largely native firms.

“The FID sends a robust sign Shell is optimistic the divestment deal will pull by means of,” stated Dolapo Akinola, an power analyst based mostly in Lagos. “Shell has been vocal about its intention to shift focus in direction of cleaner power sources and higher-margin offshore developments.”

Potential consumers for Shell’s belongings embrace native Nigerian oil firms and international gamers trying to develop their footprints in Africa.