Venturing into Nigeria’s upstream

Salim Buhari, CEO of Petrogas Energy Trade West Africa, talks to The Energy Year about the company’s recent move into the upstream sector and new opportunities in all levels of the national oil and gas industry. Petrogas Energy is an oil and gas trading company and recently acquired an upstream asset in Nigeria.

What position does Petrogas Energy have within the energy industry?
Petrogas started in 2016 with retail operations. Over the years, we have grown our company into a diversified and fully integrated oil and gas company. We identified potential in the downstream sector and focused on trading as our key competence. We are now expanding organically into other sectors of the industry. In 2018, we were able to secure our first contract with NNPC to trade Nigerian crude oil and natural gas liquids. In 2019, we were part of a group of companies that were engaged by NNPC for the DSDP [direct-sales, direct-purchase] contract, where we lift crude oil in exchange for refined products that we bring into the country on behalf of NNPC. This was our major activity until last year when we made our first venture into the upstream sector with our participation in the marginal field bidding round, which recently concluded.

How does the company aim to enter the upstream space?
We have identified the following key avenues through which we can enter the upstream sector: the marginal field bid round, active participation in ongoing IOC divestments and the upcoming oil block bidding rounds. The first step was taken with the Egbolom marginal field, where we’re now aiming for first oil. We intend to accelerate our acquisition portfolio by keying into potential IOC divestments that we have identified. What we want is an asset that meets our investment criteria, either onshore or offshore. Being an indigenous company, we feel confident about the environment, and we aim to support domestic growth and attract global investment. We are spearheading this quest. It is a good opportunity for us to quickly build capacity, size and scope in the upstream sector.

What development plans do you have for your newly acquired Egbolom marginal field?
We have merged with a group of independent companies and are now at the signature bonus payment and award stage. By nature, marginal fields are proven fields. What is required is to provide a solid field development programme with corresponding infrastructure to enable production. We already have the proven data. We must now come up with ways to produce at optimum levels. One of the key areas that we have identified as a potential early challenge is evacuation of the product from the field. We have options that need to be discussed with our partners to identify the best and safest way. In terms of required investments, it will depend on which field development programme we choose to go with. We will come up with a joint strategy that optimises the field and enables us to reach first oil as soon as possible.
We expect to start producing in two years’ time. However, we still need to go through the farm-out agreement. The Department of Petroleum Resources has identified ways to optimise the process of documentation and acquire necessary permits, having learned to swiften the process compared to the last bid round.

Read the original post here: https://theenergyyear.com/articles/venturing-into-nigerias-upstream/