The future of Nigeria’s energy sector TEY_post_Adeyemi_Bero

Nigeria has a growing pool of promising local companies along the value chain that need to continue their growth trajectory.

Ademola ADEYEMI-BERO Managing Director and CEO FIRST E&P

The future of Nigeria’s energy sector

November 22, 2022

Ademola Adeyemi-Bero, CEO and managing director of FIRST Exploration & Petroleum Development Company (FIRST E&P), talks to The Energy Year about the company’s recent achievement of first oil and its planned contribution to Nigeria’s Decade of Gas. FIRST E&P is an indigenous upstream oil and gas company.

Can you take us through your recent milestone of achieving first oil in OML 83 and 85?
The achievement of first oil on October 21, 2020 in the Anyala field was a significant milestone for our company, through a combination of technical and commercial diligence and the collective will to deliver despite the challenges. Financing the project from international lenders and quasi-equity institutions was a major challenge at the start of the project. NNPC, our JV partner, took the rare and game-changing decision to fully fund our share (and their JV share) of project costs for the year post-FID.
This was a first of its kind and gave the necessary launch impetus for this unique project that promised material oil and gas production at a very competitive unit technical cost (about USD 15 per barrel). Our local Nigerian banking partners also contributed sustained project funding through to first oil.
NNPC and our local banks believed in our project development plan and the FIRST E&P execution vehicle and decided to take the project funding risk. We are grateful that NNPC showed leadership by believing in an indigenous company.
They enabled us to deliver an offshore green field development project in 50-metre shallow water with world-class standards, now adding material value to our company, NNPC JV partners and, importantly, to our country. The success of this project, from the planning stage to execution, can be attributed to the steady collaboration with our JV partner and specifically the NAPIMS joint project team. We have shown how a JV formed by public and private entities can work together seamlessly to deliver a world-class project.
First oil production came on stream 27 months after project FID, whereas similar projects in Nigeria take over twice this duration, and FIRST E&P achieved this at the height of the Covid-19 pandemic in 2020. We had several logistics challenges because we were loading out of several OEM locations worldwide that were all in the Covid-19-related lockdown. For instance, we had the Abigail-Joseph FPSO in Singapore and equipment being manufactured in Denmark and the UK that was ready to load out in February and March 2020, when the world went into pandemic lockdown precautions.
We had over 700 people offshore at some point in time and had to adhere to every Covid-19 regulation and protocol to ensure business continuity and that our project activities were not impacted. All in all, FIRST E&P prides itself in executing one of the major projects that was successfully completed in record time at the height of the global Covid-19 pandemic.

How is FIRST E&P contributing to Nigeria’s Decade of Gas?
Nigeria’s offshore is mostly dominated by oil production, and most of the produced gas is flared, reinjected or transported from field-specific infrastructure to LNG or export-driven projects. FIRST E&P wants to change this paradigm. The Anyala and Madu fields have approximately 1 tcf [28.3 bcm] of gas, and within a radius of 60-80 kilometres, there is probably 15-20 tcf [425-566.4 bcm] of other third-party gas resources.
The absence of open-access gas gathering, processing and transportation infrastructure in the offshore has hindered the commercialisation of the material gas resources. Raw gas in a reservoir cannot be commercialised within an integrated value chain. It must be processed and conditioned to pipeline-specification gas flow, which entails separating the gas liquids, condensates and related heavy ends before moving it onshore or commercialising demand points efficiently.
FIRST E&P is developing the first open-access offshore gas gathering and processing hub in the central offshore axis around its operated OML 83 and 85 assets. It will have the capacity to process 1 bcf [28.3 mcm] per day, a mix of FIRST E&P’s gas as well as other third-party gas within a 60- to 80-kilometre radius.
This offshore gas hub will process wet gas to pipeline specifications as well as enhance value from our gas resources with extraction of the condensate and NGLs. Robust gas transportation options in addition to pipelines, such as LNG and CNG, will also be incorporated into the development concept to efficiently serve both local and international markets. The offshore gas hub plant FEED has been launched and is expected to be completed in mid-2023 when the formal project FID is taken to assure first gas is on stream in 2026.
In 2016, we acquired a 10% stake in a Netherlands-based company called Twister, which has technology for processing offshore gas without chemicals; it has a minimal carbon footprint. Dangote owns the remaining 90%. This technology strengthens our gas development and proposition for the offshore terrain.
We are open to partnerships that fit our strategic view that gas is the clean transition fuel in the journey to net-zero carbon emissions, and our objective to build a material offshore gas gathering and processing hub model that serves both the domestic and international market demand. FIRST E&P seeks partners with deep experience in operating gas processing hubs, as well as credible offtakers of gas to key markets.

 

What is FIRST E&P’s growth strategy?
FIRST E&P attained a production level of 44,000 bopd from the western accumulation of the Anyala Field (OML83) within 15 months of achieving first oil. The development of the Madu Field (OML85) is ongoing and will take the Anyala-Madu fields production level to above 60,000 bopd by Q2 2023. The unit technical cost (UTC) for the Anyala-Madu field development will be about USD 16 per barrel, with a unit operating cost (UOC) of around USD 10 per barrel.
Our growth strategy continues to focus our footprint on the offshore shallow water, building an integrated oil and gas production company that transitions into an energy provider hinged on the material gas infrastructure and resource base. We have a five-year plan that achieves 100,000 bopd and 300 million scf per day by 2026/2027. We want to achieve these targets while being environmentally friendly with a minimal footprint, eliminating emissions and decarbonising to the net–zero targets.
We plan to reduce emissions to as little as five kilograms of carbon dioxide equivalent per barrel, a world-class target. We will achieve this by launching our gas project. We are also working on a strategy to position early with a toehold in the renewables space. This strategy sits on the energy solutions-provider theme. Given our access to gas, blue hydrogen is a consideration. Blended energy solutions also lend to solar technology applications. These are our plans. Though we are a growing company, we aim to exceed expectations.

How do you view the future of the Nigerian energy industry?
The Nigerian energy sector needs to push the reset button to effectively embrace a prosperous future. The recently passed PIA [Petroleum Industry Act] and the emerging regulations, the timely launch of the Decade of Gas with the elevated global demand for gas, the new dynamics around the net zero emissions target and the re-segmentation of players in the Nigeria petroleum industry with the advent of major IOCs retreating to the deepwater collectively represent opportunities on the bed of other Niger Delta-inherent challenges that will fundamentally shape the Nigerian energy industry for the next 50 years.
Key countries in Europe are chasing alternative gas suppliers, and Nigeria must play the leading role there. Our gas reserves have been discovered, but we must adequately mature the gas to be development ready, and further explore to increase the gas resource base. Nigeria should play the global political game by becoming the top gas exporter while capturing the right partnership deals that unlock infrastructure development funding and position itself to be a credible supplier for domestic and international markets.
These investments will foster the socioeconomic growth of our population, which is crucial for a prosperous country. We must also focus on oil development by growing our production; the end goal should be 3 million bopd, which is aligned with emissions reduction targets.

What should be the Nigerian government’s prerogatives to foster local content development?
Major IOCs are leaving Nigeria, and local companies must emerge to effectively fill their places. The government should enable partnerships and an environment that allows NNPC to emerge as the national oil company of choice as well as enable the growth of more indigenous oil companies. We have a growing pool of promising local companies along the value chain that need to continue their growth trajectory. Nigerians have an incredible entrepreneurial spirit, and we should take advantage of that drive.
Prior to the divestments, the government intuited that it had to support local companies even if it was not written in the laws. They were ready for a possible IOC divestment, and thanks to their efforts, we are now prepared to take over. As we advance, the government should pass laws to make the onshore and shallow-water areas more attractive for investments – these are the areas where locals can play a crucial role.

What is FIRST E&P’s value proposition regarding CSR?
We have a vision of being the most admired indigenous company contributing to the wellbeing of Nigerians. We have been in production since October 2020, and we have not had a single incident in 4.4 million work hours, while also not losing a single barrel due to disruptions by host communities. Our relationship with them has been excellent.
We send children from our communities in Bayelsa State to better secondary schools in Lagos, to give them a competitive advantage for their future. We also train and send teachers to the communities to improve the local schooling system. We impact their social development and livelihoods with the provision of access to clean water.
We care about our ESG agenda and plan to plant a million trees. This project will benefit our carbon credit while restoring the local ecosystem.
In a nutshell, we are trying to make sure we cover the entire scope of a responsible E&P company. The key to our success lies in our partnerships, compliance with every regulatory and HSE framework, and optimal relationships with our host communities.

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