Total exec on Egina, gas and upcoming projectsOctober 24, 2018
Nicolas Terraz, the managing director of Total E&P Nigeria, talks to TOGY about developments in the company’s projects in the country, the role of natural gas in the market and the outlook for the industry. Total is active across the value chain in Nigeria, with affiliates operating about 15% of the country’s oil and gas production.
• On growth areas: “For Total the new opportunities will be mainly around our offshore and gas operations.”
• On upstream: “As production gives the revenues of today, some may put more focus on production. But you have to keep in mind that oil and gas is a long-term industry where you have to prepare the future. So, strong exploration is of course, a priority.”
• On outlook: “Let’s stay prudent. Volatility is still high and it is our responsibility to continue to build on operational excellence, to control our costs, maximise the utilisation of our assets and deliver the projects.”
• On natural gas: “In Nigeria, 40% of our production is gas and growing our gas business throughout the value chain is one of our priorities. Over the past two years, we signed, together with our joint venture partner NNPC, three major long-term contracts to supply the domestic gas market.”
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What are the updates on the development and finalisation of the Egina project?
In January 2018, the Egina FPSO made history as the first FPSO unit to berth at quayside in Nigeria for the installation and integration of six locally fabricated topside modules. After seven months of integration works in SHI-MCI yard in Lagos, the FPSO sailed away on August 26, 2018 and arrived three days later at its final location on Egina field. It has now been moored on site and hook-up activities are ongoing to connect the subsea infrastructure to the FPSO.
A total of 24 production and water injection wells have been drilled and completed and will deliver the required potential of 200,000 barrels per day at first oil. We also achieved a drilling world record of less than 21 days for a deepwater well. Our target is to achieve first oil by the end of 2018.
With more than 24 million direct man-hours performed in Nigeria with zero fatalities, the Egina project has achieved many firsts in the area of local content development: the construction of the first FPSO fabrication and integration yard in Africa with its 500-metre-long quay; the fabrication, installation and integration of six large topside modules; construction of the largest six-slot subsea production manifolds; the in-country assembly of integrated control and safety system; the fabrication of largest loading buoy ever built in Nigeria; and a project management team fully based in country.
Being the first deepwater project launched after the enactment of the Nigerian Content Act in 2010, the Egina project was a challenge on many fronts. In order to meet the requirements of the act, we invested heavily in local capacity and infrastructure development, as well as in training programmes.
What are the details on the Ikike project in terms of timelines, investment, production and impact for the country?
Ikike is a field located in shallow waters, within the OML 99 lease held by the NNPC-Tepng joint venture, approximately 15 kilometres north of Amenam. The project involves the development of over 70 million boe with oil production of 32,000 barrels per day at plateau.
The initial field development plan was approved in 2010 and basic engineering studies were performed between 2010 and 2014. However, the project could not be launched at that time due to the high development cost. Studies were re-launched in 2016 with the objective of simplifying the development concept and minimizing costs. This led to a significant reduction of the estimated project cost, making the Ikike development feasible from an economic viewpoint. A new basic engineering was completed in March 2018 and we are now working towards a final investment decision at the end of 2018.
What is Total E&P Nigeria’s strategy with regards to gas development?
In Nigeria, 40% of our production is gas and growing our gas business throughout the value chain is one of our priorities. Over the past two years, we signed, together with our joint venture partner NNPC, three major long-term contracts to supply the domestic gas market. Through these contracts, we are now supplying gas for power generation and will soon supply gas for the distribution sector and for a major fertiliser plant in the Niger delta. In addition, we remain fully committed to the future development of NLNG, a world-class liquefied natural gas plant in which Total is a shareholder.
What is the growth strategy for the company in Nigeria?
Our future growth is focused on two main areas: offshore and gas. In deep offshore, as earlier mentioned, the Egina project was launched in 2013 and will start-up end of 2018. With a production of 200,000 barrels per day of oil, Egina will add approximately 10% to the Nigerian oil production. Through projects like Egina, Total remains committed to the development of local industry capabilities.
How does Total E&P Nigeria evaluate the trade-off between exploration and production activities in the current industry scenario?
There is no real trade-off between exploration and production and we pay close attention to both. As production gives the revenues of today, some may put more focus on production. But you have to keep in mind that oil and gas is a long-term industry where you have to prepare the future. So, strong exploration is of course, a priority. On average, we are drilling two exploration and appraisal wells each year on our operated licences.
What are the key future opportunities and challenges for the Nigerian upstream sector?
The recovery of the industry in the last two years has restored confidence amongst industry players and unlocked appetite to tackle new opportunities. As said, for Total the new opportunities will be mainly around our offshore and gas operations. But, let’s stay prudent. Volatility is still high and it is our responsibility to continue to build on operational excellence, to control our costs, maximise the utilisation of our assets and deliver the projects.
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