Added value from IOCs

Nigeria

Christel Kvalvik, managing director of Equinor Nigeria Energy Company, talks to The Energy Year about the essential role of IOCs in the local energy industry. Equinor Nigeria Energy Company is a subsidiary of Equinor, which operates in more than 30 countries worldwide.

What challenges need to be addressed in order to tap Nigeria’s resource potential?
Resource-wise, Nigeria is undoubtedly a country of opportunities. There are large quantities of unexplored oil and gas resources. For example, there are deepwater gas resources that are yet to be tapped into. On a more sustainable note, there are also opportunities for renewable energy, particularly solar. However, Nigeria is also a country of challenges. When Equinor looks at where to invest, commercial attractiveness and value creation, in addition to factors such as the business environment; the legal, ethical and compliance-related risks; and how the country fits with our future ambition for an international portfolio are taken into consideration. These days, low carbon is also a significant part of our decision process. For Nigeria, we do have some concerns when it comes to the commercial attractiveness of projects, legislation, uneven or unclear application of the current laws and policies and contract sanctity. These are concerns that the new Petroleum Industry Bill (PIB) has the potential to resolve or minimise. As an IOC present in Nigeria, Equinor has actively engaged in the PIB process, working closely with the Nigerian National Petroleum Corporation (NNPC) to make this bill something that will truly contribute to developing the country’s oil and gas industry. There are also security challenges both onshore and offshore that need to be addressed and require continuous attention from the government. Finally, we believe that both Nigeria and IOCs need to jointly work on issues such as compliance, transparency and trust.

How vital is the presence of IOCs in Nigeria’s upstream?
It is positive that local companies are developing their experience and capacity within oil and gas. A robust local industry is very much needed as it is Nigerians who should be developing Nigerian resources. Complementing this, international companies bring added value in the know-how, technology, digital capabilities and capital required to make the industry flourish. They have the muscle to carry large investments, especially for deepwater offshore exploration, production and developments. For Equinor, it is important to establish good collaboration between local and international players, as well as between the private sector and the government.

How is Equinor embracing the energy transition in Nigeria?
The climate challenge has become more prominent in recent years. Equinor’s ambition is to take a leading position in the energy transition. Our goal is to achieve carbon neutrality in our global operations by 2030 and become net zero by 2050. From a global perspective, there are several steps we are taking to achieve this; The first is to become an industry leader within carbon efficiency. Our CO2 emissions per boe is currently around 8 kg. By 2025 we plan to reduce this even further by high grading our portfolio and focusing on abatement measures. These range from electrification of some of our offshore assets on the Norwegian Continental Shelf (NCS) – either by power cables from land or by offshore wind turbines – to integrated and onshore-based support centres guiding production and emissions, to various digital tools.
The second is to ensure a profitable growth in renewables, where Equinor primarily focuses on offshore wind. And the third is to accelerate decarbonisation. This includes capturing and storing CO2 underground, which is and will be an important building block for our net-zero ambition. We have a long history of storing CO2 at fields such as Sleipner in the North Sea, and we will build on this experience when we partake in developing full value chains for carbon capture and storage, such as through our ownership in the Northern Lights JV together with Shell and TotalEnergies.
When it comes to Nigeria, Equinor has been present in the country for almost 30 years. We are working very closely with Chevron, the operator of Agbami, on how to keep emissions as low as possible. Flaring is an area we want to tackle and eventually eliminate. This is an ambition we believe is shared with all our partners. Equinor is also looking at what place deepwater natural gas has in the energy transition. We believe that the transition might look different in Africa, compared to the EU and US.
In some places, such as Nigeria, we are not talking about moving from energy to cleaner energy; we are talking about moving from no energy to energy for basic use such as cooking, travel and development. This is in line with United Nations Sustainable Development Goals, which state that universal access to affordable and clean energy must be ensured. It will thus be about capitalising on the country’s rich resources, and natural gas is one that is high-potential and sustainable.
To ensure that natural gas is part of Nigeria’s energy transition, Equinor will bring all our knowledge and expertise on deepwater gas developments and infrastructure into Nigeria to contribute to the country’s Decade of Gas. The resources and the market are certainly here.

What approach are you taking to exploit gas resources in your exploration licences?
Equinor is the operator of OML 128 and OML 129 with Chevron as partner. For OML 128, we are working with Chevron to extend production from Agbami for many decades to come. We also plan to assess the prospectivity of the remaining part of the lease and decide on the next steps. As for OML 129, we have made two discoveries: the first one is the Nnwa-Doro discovery, arguably Nigeria’s largest deepwater non-associated gas discovery. It is still not developed but we are doing evaluation to further understand its potential and its challenges and discussing the terms required for making such a development commercial. The second is Bilah, also a gas and condensate discovery that may need an appraisal well for us to fully comprehend its potential.
For both discoveries in OML 129 we are at a stage of assessing their commerciality. There are several necessary steps that need to happen before the deepwater gas resources can be developed and we are currently looking at what it will require in terms of investments, in terms of fiscal and contractual incentives, in terms of commercial gas offtake arrangements and so on. Also, we are looking to renew and extend the licences of both OMLs.

What strategies are being explored to reverse the production decline in the Agbami field?
There is an incredible history behind Agbami, it being the second deepwater field discovered in the Niger Delta back in 1998. It is one of the largest deepwater discoveries in Nigeria, estimated to hold potential recoverable volumes of 900 million barrels of oil, and is at a water depth of 4,800 feet [1,463 metres]. The field spans OMLs 127 and 128 and is operated by Chevron with 67.3%. The remaining working interests are held by Equinor (20.21%) and Prime 127 (12.49%). Agbami is an important asset for Equinor.
Production rates for the last 12 months have been around 125,000-148,000 bopd, but as it is a brownfield, production rates are now declining. The strategy going forward is to find the right reservoir management plan and techniques to not only stabilise production but also ramp it up, if possible. In this regard, we are working closely with Chevron and Prime 127 to bring in technology, competence and techniques for how to maximise the commercial production from this large field. In addition, the Agbami field could, in the future, be a hub, hosting satellites and tieback fields from other nearby licences. This hub strategy is essential as our existing infrastructure could be used for the development of other adjacent fields.

What kind of technology transfer does Equinor facilitate between Norway and Nigeria?
Equinor is a world leading operator in offshore developments and gas commercialisation, which is relevant to Nigeria’s further development within the oil and gas sector. Equinor has the ambition of continuously exploring, developing and implementing technology to increase safety, create value and reduce emissions from our productions. As operator of more than 40 installations on the NCS, we have the possibility and scalability to take a leading position in the digital energy journey. Digital twins, remote operations, digital field workers, holo lenses and integrated operation centres are some examples of what we are working on. Also, the vast number of installations provides us with a great starting point for collection, structuring, analysis and modelling of data. Although there are differences in how far the technical and digital journey have progressed in different countries, much of the experience we have in Norway can be applied globally, including in Nigeria. There is also the possibility to do benchmarks between Agbami and similar assets on the NCS, which will provide a basis for assessment of gaps and improvement areas.

How is Equinor creating value for both the country and the industry?
Equinor strives to operate in a sustainable way that creates value for both shareholders and society. We believe that value for society can be created in several ways – one being dedicated CSR projects. For over 20 years, Equinor provided support to the Akassa Community, in Bayelsa State, through the Akassa Development Foundation. Various empowerment projects were implemented cutting across youth and women empowerment, vocational training and building community centres. Equinor’s CSR strategy is now being implemented in line with the objectives set by the government through NAPIMS. Our focus areas are education and healthcare, specifically cancer prevention and control. Through the Agbami Co-Venturers comprising Chevron, Prime 1 (former Petrobras), Famfa, NNPC, and Equinor, 28 fully equipped chest clinics have been built in various parts of the country to combat the tuberculosis scourge. The Agbami co-venturers have also donated fully equipped science laboratories to various secondary schools nationwide.
Equinor also believes that value for society can be created by the knowledge, experience and technology that a company brings to a country. Although Equinor is not among the largest producers in Nigeria, we do have large operations globally, including in Norway, the UK, the US and Brazil. This means that Equinor Nigeria has full access to Equinor’s world class skilled resources, the newest technology and efficient digital tools. It also means that Equinor has a large basis for benchmarking performance and the effects of various improvement activities, and learning from our global portfolio. All of this can be used in our business in Nigeria. Through our climate ambitions, we are working on making natural gas more environmentally friendly, and we are building a CCS value chain. This is also relevant for Nigeria.
Adding to this, as a responsible corporate citizen Equinor has paid over USD 3 billion in taxes to the Federal Government of Nigeria, which ultimately also creates value for a society.
Taking into account that Equinor is a company that believes in sharing information, successes and experience and has “collaboration” as one of our core values, our humble opinion is that there is a significant upside to Equinor’s presence in Nigeria.

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