Nigeria’s National Petroleum Corporation this week signed a deal with Shell, Exxon, Total, and Eni to develop an offshore oil block that includes the deepwater Bonga field, the NNPC said in a series of tweets.
The NNPC noted the deal marks a historic moment as it settles long-running disputes between the Nigerian government and international oil companies.
According to the company, the deal could unlock up to $10 billion in new investments in Nigeria’s oil industry. It could also add 150,000 bpd to the country’s oil production, bringing the total output from the block—Oil Mining Lease 118—to 350,000 bpd, Bloomberg reports.
Interestingly, for Shell, the deal comes after earlier this year, chief executive Ben van Beurden said that Shell does not see its upstream oil operations in Nigeria as compatible with its strategy to become a net-zero energy business.
“We cannot solve community problems in the Niger Delta,” said the top executive at Shell, which has encountered numerous problems in Nigeria’s onshore in recent years, including oil theft and pipeline sabotage, as well as lawsuits brought up by local communities over oil spills.
This week, after the news of the deal broke, Shell told Bloomberg that “Through these agreements, stakeholders will have clear and stable set of terms incentivizing further development of the OML 118 block and opening further opportunities in the prolific Nigerian deep water oil and gas industry.”
Despite bearish oil demand forecasts over the long term, Nigeria has serious ambitions in expanding its oil industry. More than 100 oil and gas projects are set to launch over the next five years in Africa’s biggest oil producer, including 25 upstream oil and gas projects, 28 petrochemical projects, and 24 refinery projects. The Bonga field is among the 25 upstream projects, and is expected to start commercial production in 2025.
Irina Slav wrote this article for oilprice.com