Traction in gas monetisationJanuary 7, 2021
Osa Owieadolor, managing director and CEO of Platform Petroleum, talks to The Energy Year about the significance and potential impact of the marginal fields bid round and the company’s plans for monetising gas. Platform is an integrated oil and gas production, processing and marketing company that operates the Egbaoma marginal field.
What factors are triggering a gradual uptick in industry activity?
The experience in 2020 has been a very unique phenomenon due to the major disruptions caused by the coronavirus pandemic. We saw how a mist of uncertainty hit the industry, as no one could predict what sort of crisis would follow. Despite the situation, Nigeria has managed to weather the storm relatively well. Solid protocols have been established to guarantee business continuity and the new vaccines have generated a wave of optimism across the market.
The continuing demand for energy will re-energise the whole economy. We have also seen the price per barrel stabilise above USD 40, which is a major relief for the whole industry. These reassuring indicators will restore investor confidence as a vehicle of recovery.
How significant was the marginal fields bid round and what impact could it bring?
The bid round was a true milestone as it will welcome development and spark activity in the sub-sector. The last bid round was carried out in 2003, so it was long overdue. Looking back, it was precisely this type of marginal field round that gave a platform to companies like ours. Back then [in 2003], 24 licensed fields were awarded to 32 companies but only about 10 successfully developed their asset to the production phase.
This time around, there are 57 assets in play, which, if developed, will open up an array of opportunities. We will witness a multiplier effect which will lead to indigenous players becoming owners of oil assets, employment will be spurred and thus, value will be created for Nigerians. So this has been a very good move by the government.
The Egbaoma field was the very first in the class of 24 to be brought into production. So, as a company with a lot of experience and capacity in developing and operating marginal fields, we decided to participate in this round. By doing so, we aim to grow inorganically and become a multi-asset company with two marginal assets under our belt before the end of the year.
How successful have you been when it comes to maintaining production flows?
We operate the Egbaoma field [formerly Umutu/Asuokpu], located in OML 38, in a joint venture with Newcross Petroleum. In terms of field development, we are currently producing around 3,500-3,600 bopd. This has been possible because of the success recorded in the well we drilled and completed in March 2020, which was the first phase of a planned three-well campaign. Due to Covid-19, we had to put the rest of our drilling scheme on hold. Despite slowing down our work programme, we have managed to keep production rates stable and continuous.
To what extent is gas redirecting the future of Platform Petroleum?
In 2021, we are going to be focusing more on the gas business. Over the past decade, we have injected significant resources and financial capital into gas infrastructure to enable us to monetise our huge gas resources and also reduce gas flaring in our field.
During this period, we have locked in several GSPAs [gas sales and purchase agreements] with offtakers interested in buying wet or lean gas, as an alternative to flaring it. These include 30 mcf per day [849,600 cubic metres] of wet gas for PNG Gas Limited, 12 mcf [339,840 cubic metres] per day of lean gas supply to Powergas and the 10 mcf [283,200 cubic metres] fixed plus 20 mcf [566,400 cubic metres] per day of variable gas supply to Nigerian Gas Marketing Company (NGMC).
In September 2020, we started delivering slightly less than 1 mcf [28,320 cubic metres] of gas to one of our lean gas offtakers, PowerGas Ebedei, for their CNG plant located next to our facility in Umutu. We hope to ramp up this gas delivery to around 3 mcf [85,000 cubic metres] by Q1 of 2021. In November 2020, we achieved our first commercial lean gas delivery to the NGMC following the commissioning of a section of the OB3 gas pipeline by the Nigeria Gas Company (NGC).
Indeed, this has been a defining moment for the Platform/Newcross JV as we gradually commence the full transition into a gas midstream-focused business. Overall, we are gaining a lot of traction with our gas monetisation programme and by the end of 2021 we hope to achieve as much as 50-60% contribution of gas revenue to our total revenue portfolio.
To what extent is the spirit of local content embedded in your ethos as a company?
Local content is part of our raison d’être; we are a vehicle of local content. All of our staff are Nigerian and we try to create an environment in which we empower local service providers and promote indigenous capacity. Moreover, a local oil producer should deliberately give the host communities the rightful place they deserve. Over the last one and half decades of our operations, we have made social impact through human capacity schemes such as scholarships and health initiatives. Also, one of our offices is located in the heart of one of the communities where we employed more than 150 locals.
This also feeds into how we see the company. We are a vehicle focused on creating value for all stakeholders under a shared-value principle. We recognise that the staff and the community are key stakeholders of our business as they are ingrained in what we do and what we represent. It is all about promoting a holistic stakeholder-focused value creation.
What new corporate strategies have had to be prioritised in these tumultuous times?
For now, the priority rests in ensuring the safety and well-being of our staff. We are still working remotely to minimise exposure. If there is one thing this period has taught us, it is the need to fully embrace technology. This is a phenomenon we have all come to terms with. Up until today, digital technology has been highly underutilised when driving business in Nigeria. Not only have we driven our firm remotely but we have managed to reduce our operating costs by up to 10% by using technology. It’s all about adapting to the times we are living in.