On December 18, 2023, TotalEnergie CEO Patrick Pouyanné met with Nigerian President Bola Tinubu to sign a cooperation agreement with the Nigerian National Petroleum Company Limited.
Nigerian oil industry landscape
Nigeria, Africa’s largest economy, presently oversees operations across 323 oil fields, both onshore and offshore, containing reserves of crude oil, condensate, or natural gas, all interconnected with 265 processing sites. Post-stabilization, oil and gas products find their way to markets through 31 terminals. Despite its vast potential, Nigerian oil production has experienced a decline over recent years. However, the sector is displaying signs of resurgence, buoyed by offshore production expansion. Concurrently, the government is intensifying efforts to bolster security and foster enduring partnerships.
In 2021, Nigeria enacted the Petroleum Industry Bill (PIB) aimed at invigorating foreign investment in its oil sector. This legislation encompasses regulatory reforms, royalty adjustments, and tax framework delineations. Since May 2023, the Nigerian President has spearheaded various economic initiatives to incentivize financing within the sector. Bola Tinubu has also pledged to alleviate impediments within the oil and gas industry while urging producers to ramp up production efforts.
TotalEnergies presence in Nigeria
TotalEnergies reaffirms its steadfast commitment to its business endeavors in Nigeria, announcing a substantial investment of USD 6 billion in the country’s oil and energy sectors. The French oil giant is directing its focus towards gas and offshore production, as part of a comprehensive strategy to enhance methane detection and measurement, leveraging its advanced AUSEA technology deployed via drones across Nigerian oil and gas installations.
The Nigerian platform holds paramount significance for TotalEnergies, contributing between 8% and 10% of its overall oil production. The company’s local development strategy pivots around three core pillars:
- Training and employing local talent
- Procuring goods and services locally
- Advancing infrastructure development.
By prioritizing these pillars, TotalEnergies aims to foster sustainable growth and contribute to Nigeria’s socio-economic advancement while solidifying its presence and impact in the region’s energy landscape.
Egina: TotalEnergies’ offshore project
TotalEnergies is actively pursuing new opportunities, particularly in deepwater and gas production, with the Egina project emerging as a standout venture. Launched in 2018, Egina represents one of the largest oil projects globally, situated approximately 130 km off the Nigerian coast, at a staggering depth exceeding 1,500 meters, and 200 km away from Port Harcourt. TotalEnergies maintains a 24% interest in the project, collaborating with NNPC, CNOOC, Sapetro, and Petrobras. The envisaged production capacity of the field, standing at 200,000 barrels per day, constitutes a significant 10% of the national output.
Egina epitomizes a localized development model, underscored by substantial participation of national resources. The project prioritizes the utilization of local expertise to bolster the Nigerian industry and facilitate the transfer of knowledge. Notably, the majority of individuals engaged in infrastructure construction are Nigerian nationals, with over 77% of work hours being locally conducted, primarily in Port Harcourt and Lagos.
In a concerted effort, TotalEnergies, alongside the Nigerian Content Development Monitoring Board (NCDMB) and Egina’s principal stakeholders, has set an ambitious objective. The aim is to train over 200 Nigerian students as engineers and technicians, a proactive initiative aimed at enhancing their competencies and expanding job prospects within the local energy and oil sectors.
TotalEnergies and its competitors: Shell and ExxonMobil
The meeting between the CEO of TotalEnergies and the President of Nigeria mirrors similar discussions held with other major oil companies like Shell, all aimed at attracting investments to the oil-rich African nation. Just ten days prior to this engagement with the French oil company, the Nigerian presidency finalized a comparable agreement with Shell. The British oil and gas giant unveiled a project portfolio valued at 6 billion USD, focusing on offshore production of natural gas and liquefied natural gas (LNG).
Shell: resumption of supply to State refinery
On February 8, Shell Plc resumed crude oil supplies from its Bonny export terminal to the state-owned Port Harcourt refinery, marking a significant step forward. The refinery, a state-owned facility, is set to commence operations in the first quarter of 2024. Initially, the dual-unit plant will process 60,000 barrels of oil per day (bpd), with plans to scale up to its full capacity of 210,000 bpd later in the year.
Osita Nnajiofor, the Bonny Oil Terminal Manager at Shell, reported that a total of 475,000 barrels of oil were delivered to Port Harcourt on January 18. Nnajiofor also mentioned that future supplies to the Bonny oil and gas terminal will be contingent upon the demand for the product, signaling a responsive approach to market dynamics.
ExxonMobil still in the running
Despite the sale of a portion of its Nigerian oil and gas assets to Seplat Energy in 2023, ExxonMobil remains committed to its investments in the country. The American company has announced its intention to boost oil production volumes by 40,000 barrels per day (bpd). However, specific details regarding the plan and its implementation date have yet to be confirmed.
Nonetheless, this project aligns with Nigeria’s target of producing 1.8 million bpd, as set by the Organization of the Petroleum Exporting Countries (OPEC). The increase in production by ExxonMobil reflects its continued confidence in Nigeria’s oil and gas sector, despite recent divestitures and industry challenges.
