Woji WELI Country Business Unit Manager BW OFFSHORE NIGERIA

Nigeria is a huge gas province and we see a lot of potential in this area.

Woji WELI Country Business Unit Manager BW OFFSHORE NIGERIA

Growth in Nigeria’s deepwater

July 14, 2021

Woji Weli, country business unit manager of BW Offshore Nigeria, talks to The Energy Year about the reasons for the rapid growth of deepwater oil extraction off Nigeria and the company’s plans for diversification. The company is a subsidiary of Oslo-listed FPSO operator BW Offshore and operates two FPSOs in Nigerian waters in the Abo and Okwori fields.

For exclusive interviews and articles read: The Energy Year Nigeria 2021.

What are the prospects for and reasons behind increasing deep offshore production?
Deepwater in Nigeria will continue to play an increasing role in the near future. Since oil extraction began in the Abo and Bonga fields (in 2003 and 2005 respectively), deepwater production has continued to increase as a proportion of total production. One reason for this has been the increasing development of new deepwater prospects, led up to now by IOCs.
Another reason is the relatively large production from individual deepwater fields. They are prolific. For example, the Bonga field started production at 225,000 bopd, which at the time was 10% of Nigeria’s production in just one development. This would compare to the sum total of some 10-15 typical onshore fields to match that level of production.
The third reason is social. Onshore production had started declining because of social upheavals leading to production interruptions. There is therefore higher security of production from the deep offshore fields. As a consequence, one can see the IOCs stepping back from onshore and concentrating on deep offshore production.
On the aggregate, the development will result in an increase in Nigeria’s production because local players taking over onshore assets are better positioned to respond to and operate in that environment. On the other hand, IOCs will concentrate on the deep offshore, having better technological skills and finances required in that environment.

To what extent are elements like a fair fiscal regime and a reduction of production costs needed to advance Nigeria’s industry?
There have been various fiscal regimes dating as far back as the discovery of petroleum in Nigeria in the mid-1950s. For the deep offshore, some consider that in the 1993 PSC, the government was relatively generous to oil companies. This could be because of the geological risks at the time and financial requirements. Since then, as production and development of the deep offshore progressed, the government has tended to tighten the fiscal system, requiring more of a stake to a greater or lesser extent as in other countries depending on whose point of view it is.
Whatever fiscal system is enacted must be fair to the nation, the government and those taking the risk of developing the oil reserves. The fiscal system must enable the oil companies to recover their costs and make a reasonable profit, not a windfall profit. There is something else that needs to be worked out among stakeholders: they must work together to reduce costs. What they share in terms of profit is burdened and reduced by high costs.
Moreover, we are becoming a high-cost country, and this is due to several factors. For example, security is a major cost escalator. In our offshore FPSO operations, the cost of providing our own security is particularly high. Another cost is the dearth of infrastructure and where it exists at all, it’s in a poor state. I am referring to roads, telecommunications, electricity, etc. IOCs, LOCs [local oil companies] and government need to work together to reduce costs, which will mean there is more to share. Sometimes there is tension between producers/operators, the community and the government. But surely the first thing all sides should do is work to make the biggest “cake” of field revenues possible. And then they should think about equity and fairness in dividing it up.

How seriously is BW Offshore, as an international operator, taking local content?
As an international operator, we comply with local content regulations. Approximately 95% of our staff are local. We source locally as much as possible, and with a view to this we have set up some in-country fabrication agreements. We do this by awarding our contracts to local companies as much as possible.
Even there, challenges exist because sometimes the local firms act as middlemen, which doesn’t make sense. We should not be paying 10% more to a middleman to acquire a foreign piece of equipment or service when we can just go to the foreign supplier ourselves! This is one area where we need to work with the NCDMB [Nigerian Content Development and Monitoring Board].
The local content regulation is a step in the right direction, but we need to ensure its objectives are realised and that we are not stifling operators. If everything must be brought from overseas at a mark-up, we will never get to the stage where we develop in-country expertise and capacity.


How has the pandemic affected operations and how will the application of offshore remote support benefit performance?
There have been numerous challenges in the last 12 months, but we have been able to bounce back. One aspect of this was manning. In the offshore space you have a unit led by an offshore installation manager. Before Covid-19 struck, all four of our installation managers were expats and they worked in rotation – one on each vessel and two on standby, rotating every four weeks. The lockdowns complicated everything.
We solved this by setting up remote computer and control centres onshore for our offshore operations to relay their data live so that our people can watch the trends and give advice on what could become a problem in the future. It is a Remote Offshore Support and Surveillance system (ROSS). Thus, we are fully embracing offshore remote support, which will reduce operational costs and enhance efficiency in the near future.
The pandemic also hit us in the area of equipment, materials and services supply, as we couldn’t get what was needed on time. The progress of fabrication overseas as well as in Nigeria was affected. We reacted by planning more realistically and in optimal use of available resources.
As challenging as the pandemic has been, it has also been positive in some sense, as we have realised that we can do a lot more than we thought possible remotely by minor upgrades to our systems.

What is the current performance of the Abo FPSO in production and contractual terms?
The Abo FPSO has been operating since 2003 in the Abo field. This unit can still produce a nominal 20,000 bopd when there are no function echoPub() {document.getElementById('pub').innerHTML="

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