…Emerges Nigeria’s first deep-water project since 2013
…More FIDs expected in 2025-Verheijen
Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell Plc’s recent $5 billion Final Investment Decision (FID) on the Bonga North project, has ignited optimism surrounding the multinational’s planned asset sale in Nigeria.
Shell said in a statement on Monday that production will peak at about 110,000 barrels of oil per day, with 300 million barrels of oil equivalent recoverable from the area. The first oil is expected by the ‘end of the decade,’ according to Shell.
The multi-billion-dollar deep-water investment, the first 110,000 bpd project FID to be taken in Nigeria since the Egina field’s FID was announced in 2013, is seen as a positive step towards unlocking the value of Shell’s Nigerian assets and facilitating a smooth transition to new ownership.
Welligence Energy Analytics, a global market intelligence firm focused on the upstream oil and gas sector, on Monday, said the project will be a subsea tie-back to the existing Bonga Floating Production Storage and Offloading (FPSO), which is currently running at less than 60 percent capacity.
“This is Nigeria’s first deepwater FID in over a decade, following the announcement of deepwater capital incentives. Other undeveloped deepwater projects like Preowei and Owowo could progress soon,” Welligence said in a note seen by BusinessDay.
The newly sanctioned project involves drilling, completing, and starting up 16 wells (8 production, 8 water injection), modifications to the existing Bonga Main FPSO, and the installation of new subsea hardware tied back to the FPSO.
“This is another significant investment, which will help us to maintain stable liquids production from our advantaged Upstream portfolio,” Zoë Yujnovich, Shell’s integrated gas and upstream director, said on Monday.
Olu Verheijen, President Bola Tinubu’s special adviser on energy, said the FID on Bonga North and the FID on Ubeta earlier in 2024 demonstrate the efficacy of the oil and gas reforms and directives championed by the President.
“These projects will trigger broader investments to revolutionise Nigeria’s power generation, transportation, and manufacturing sectors. In 2025 we anticipate further FIDs from international and domestic players,” Verheijen said.
President Tinubu has welcomed the FID by Shell and its partners for the Bonga North Deep Offshore Field.
According to a statement by Bayo Onanuga, the president’s special adviser on information and strategy, “The landmark development” marks Nigeria’s first deepwater oil venture in over a decade.
He attributed the development to the impact of Tinubu’s policies and reforms in drawing investments in the oil and gas sector.
“We designed our policies and reforms from the start of my administration to achieve this goal. Shell and its partners’ decision to invest in Bonga North affirms the success of our efforts. We will continue to offer the necessary support to ensure their success and the realisation of Nigeria’s energy potential,” Tinubu was quoted in the statement.
Read also: Nigeria to gain 350m barrels of oil on Shell, partners’ $5bn deep water investments – Tinubu
Oil, gas potential in Bonga North
The Bonga North development is expected to significantly boost Nigeria’s oil production and extend the life of the Bonga field.
Bonga North, which currently has estimated recoverable resources of over 300mn billion of oil equivalent (boe), will involve drilling up to 16 wells and will be tied back to the existing 225,000 barrels per day (bpd) Bonga floating production, storage and offloading (FPSO) facility.
The FPSO handles output from the Bonga Main and Bonga North West fields, which started in 2005 and 2014, respectively.
Crude production from the FPSO averaged 120,000 bpd in January-November, with output in November rising by 9 percent on the month to 135,000 bpd, according to the Nigeria Upstream Petroleum Regulatory Commission (NURPC).
Shell said modifications to the FPSO will be required to accommodate Bonga North, but a source told Argus on Monday that these will largely be limited to the facility’s topsides.
The company previously told Argus that a separate and more thoroughgoing FPSO life-extension programme, which “will run well into 2029,” had been put in place because the facility was originally designed to operate only until 2025.
Shell’s Nigerian offshore subsidiary operates the Bonga North project with a 55 percent stake under a production-sharing contract with state-owned NNPC. ExxonMobil, TotalEnergies and Italy’s Eni are the other project partners with 20 percent, 12.5 percent and 12.5 percent stakes, respectively.
The Bonga fields are located in Nigeria’s OML 118 licence at water depths exceeding 1,000m.
In addition to Bonga Main, Bonga North West and Bonga North, the block also holds the undeveloped Bonga South West oil field, which NNPC said will be developed in three phases. Bonga South West will have its own separate FPSO and produce 150,000 bpd at peak between 2027 and 2031, NNPC said.
Read also: Shell takes FID on Bonga North deep-water project
Impact on divestment deal
Shell’s decision to proceed with the Bonga North project comes amidst regulatory hurdles and delays after agreeing to sell its Nigerian onshore business to Renaissance, a consortium of five mostly Nigerian companies, after years of spills and theft.
Early this year Shell, which has been pumping oil in Nigeria for nearly seven decades, agreed to sell its onshore subsidiary to a consortium of mostly local companies.
“The FID sends a strong signal Shell is optimistic the divestment deal will pull through,” said Dolapo Akinola, an energy analyst based in Lagos. “Shell has been vocal about its intention to shift focus towards cleaner energy sources and higher-margin offshore developments.”
Potential buyers for Shell’s assets include local Nigerian oil companies and global players looking to expand their footprints in Africa.
