Local solutions for Nigeria’s energy gapMay 13, 2022
Adegbite Falade, CEO of Niger Delta Exploration & Production (NDEP), talks to The Energy Year about the latest developments at OML 54, the company’s strategy for its pioneering private refinery and how it has created a model for working with host communities. NDEP is a Nigerian integrated energy company, with its headquarters in Lagos and an operational office in Port Harcourt.
What are the main developments in OML 54?
We recommenced a detailed re-evaluation of subsurface data to evaluate possible ways to increase our production, and we are optimistic as we await the outcome of that exercise.
In November, we reached an all-time production record of 12,595 bopd from the Ogbele field. On a yearly aggregate basis, we ended up producing 30% more in 2021 than we did in 2020. Regarding cumulative barrels, we have produced over 20 million barrels from the field, even though at the time of acquisition we thought its maximum would be 5 million barrels.
Regarding gas, last year we produced on average 26 mcf [736,320 cubic metres] per day, with a record peak of 54 mcf [1.53 mcm] per day, showing our comprehensive and organic growth in both the oil and gas segments of our business.
What is the expansion strategy for OML 54’s refinery?
In 2020, we increased the capacity from the original 1,000-bpd refinery by commissioning Train II, which is a 5,000-bpd refinery. Last year, our 5,000-bpd Train III came on stream. Our plan is to be able to run trains I, II and III concurrently to establish the full capacity of the plant at 11,000 bpd.
We were the first to pioneer a refinery as a private investment in Nigeria, meaning that we had to learn everything ourselves. The OML 54 facility is still the biggest private refinery in terms of overall capacity, and we intend to further expand and optimise by extending and improving our logistical grid in terms of road transportation to overcome challenges such as under-maintained roads which undermine our activities.
How are you planning to consolidate your footprint in South Sudan?
We would like to monetise the gas there because a lot of it has been flared and we have the capacity to process and deploy it to profitable usage. We are still engaging with the various authorities in South Sudan for that to happen.
We are also evaluating the prospect of participating in the bid round for the oil blocks. Currently, we are getting a better understanding of the potential assets for sale. We operate through a local joint-venture partnership called Nile Delta, which at the moment is involved in the provision of oilfield services. We currently have more than 42 local workers working for Nile Delta, and we are one of the most respected indigenous names in the country.
Our presence there demonstrates the potential capacity that results from the co-operation between East and West Africa. Moving forward, we remain open to all opportunities that match our pan-African business aspirations.
Why is Nigeria a suitable investment destination in the energy arena?
The energy demand in Nigeria is expected to increase significantly in the near future due to our outstanding population growth. Local companies are being called on to fill this growing energy gap. We are witnessing a situation where we are now probably going to have either the fifth or sixth transition within the same democratic period. Hopefully, we will also be able to improve on the social-political environment that makes investing in Nigeria more desirable.
How is the global narrative of the energy transition impacting NDEP’s activities?
Niger Delta E&P has made huge investments to become more environmentally friendly. Four years ago, we were flaring about 180 mcf [5.1 mcm] per year. Last year, we successfully brought that figure down to 70 mcf [2 mcm] per year. In the future, we are planning to reduce this even further to about 35 mcf [1 mcm] per year, which is the maximum technical flare that is allowed under the current regulations.
Additionally, we are in the early stages of a possible involvement in renewables. We want to support and lead the Nigerian energy transition path through natural gas and our plans to expand to LPG production will reduce the use of firewood and charcoal.
How important is community involvement for NDEP?
Any NOC that is going to step up their activities must be able to manage political relationships within the community, without which the available resources will have to be left underground and cannot be exploited.
We have a proven track record of having managed community relationships extremely well, to the point that we are in our 16th year of continuous production without disruption to our operations, lives or properties. Our strategy regarding host communities has a built-in mechanism where the fortunes of the community are tied to our fortunes, through our Host Community Development Trust.
A certain percentage of our profits fund specific developments that the host communities deem important and nominate for their society. They have respectable individuals that sit on the Host Community Development Trust Board, which manages the administration of the funds for socially impactful projects, while we provide them with the requested financial means. The success of this circular system is evident in its inclusion in the recently passed PIA [Petroleum Industry Act].