Govt to Implement N364m Fabrication Programme in Oil,
 Gas Sector
 4th DEC 2006

The Federal Government recently said that arrangements had been concluded with the Norwegian government to implement a $2.8 million (about N364 million) fabrication upgrade programme for the development of the upstream sector in the nation's oil and gas industry.

Disclosing this in Lagos recently, the Acting Director, Department of Petroleum Resources (DPR), Mrs. Chioma Njoku, said that the programme was specifically set aside for the training of Nigerian fabricators in order to boost local capacity building in the upstream sector.

Njoku, in her maiden official assignment since her appointment as the acting director by the government recently, said that what brought about the programme was the outcome of the memorandum of understanding (MOU) between the two countries which is designed to enhance co-operation in the petroleum and related industries, to build capacity and improve the competencies of Nigerians suppliers of goods and providers of services to the oil and gas industries.

In a paper titled: "Current and Future Challenges in the Nigerian Deep Offshore Oil and Gas Production," at the seminar, the acting director explained that the nation's deep water region held the ace in attaining the government's N40 billion barrels crude oil reserve in 2010.

Specifically, she added that current production in the nation's three producing fields (Bonga, Erha and Abo) which came on stream this year stood at 427,000 bpd, while the average gas production stood at 394.2 mmscfld.

She added that seven other producing fields were at different stages of project developments.

According to her, the current eight billion dollars annual spending in the petroleum industry was targeted at increasing capacity building in the oil and gas sector. She noted that the annual spend was expected to grow soon as to be able to tackle the different challenge the sector would encounter in the nearest future.

"We acknowledge the collaborative efforts of INTSOK in other areas since the inception of the MOU, especially in areas of local content. The collaboration between INTSOK and Nigerian content divisions on the fabrication upgrade programme is obviously a direct outcome of the SNF report. Now, plans are being concluded to implement the $2.8 million fabrication upgrade programme to be facilitated by INTSOK for training of Nigerian fabricators for effective competition in the upstream sector.

She said: "The International Finance Corporation (IFC) has been appointed as project manager for the programme, while the sum of $2.8 million has been set aside by Nigeria and Norway on a 50-50 equity basis for implementation of the programme," Njoku added.

Besides, the acting director said that a total of 19 exploratory/appraisal wells were drilled this year alone as part of the plans to accelerate production level in the industry, especially the upstream sector, while 25 development wells were also drilled during the period.

To her, the on-going oil discoveries from the deep offshore terrain offered new opportunities for the country to correct past mistakes on resource management and local content development in the petroleum industry.

In addition, it also offered challenges that must be tackled to realise the full potentials; capacity building is a vital issue in this regard.

According to her, "Nigeria needs to build the right competencies in critical areas to ensure that more of the planned spending on deep water projects is domiciled in the country. The service sector needs to pool skills and resources to enable it compete as credible value-added centres in this process. Direct training interventions will also be a solution, which is why we welcome the INTSOK fabrication upgrade initiatives and other competency building schemes now being put in place across the industry."

Njoku, while speaking further at this year's seminar on Deepwater Technology organised by the DPR/INTSOK, a Norwegian oil and gas partners, observed that the activities in the deepwater operations were very imperatives as it dictated the notion on how to perpetually find ways to keep down the production cost per barrel, in order to effectively compete with resources from other areas.

For instance, experience have shown that in more nature deepwater regions of the world, especially the North Sea and the Gulf of Mexico, the keys to cutting costs consist in consciously seeking out cost-reduction solutions through R&D and application of prudent field development and reservoir management strategies.

"In this regards, we should start to rethink our field development strategies and fashion out cost-cutting solutions that could encourage more collaboration between operators," said Njoku.

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