Nigerian arm of the French oil giant, Total Upstream Nigeria Limited (TUPNL), has suspended the development of its multi-billion dollars Preowei Oil Field in Nigeria, citing some challenges.
Preowei Oil field was discovered in 2003. It is located in Oil Mining Lease (OML) 130 in water depth of 1,150 metres. It is the third producible oil accretion in OML 130, with big fields, such as Akpo, which began production in 2009 and Egina 10 years later.
Total, it was learnt, decided to suspend the development of the Preowei Oil Field following the slump in global demand and price of crude oil caused by coronavirus (COVID-19) pandemic and the signing into law of the amended Deep Offshore and Inland Basin Production sharing Contract Bill by the government, which altered the fiscal regime of deepwater operations in Nigeria, mostly operated by international oil companies.
But when contacted, a spokesman in Total, refused to confirm or deny the suspension of the project.
Last November, President Muhammadu Buhari signed the amended bill into law, which drastically reduced the takes by oil firms in deepwater oil fields. Ever since, upstream oil majors in Nigeria have been complaining and considering suspension and abandonment of some major deep offshore projects that have been on the table for development.
This situation was further worsened by the hard hit by the pandemic that has shut down global economy following closure of huge oil-consuming firms, suspension of flights and other activities, among others.
As a result of this development, there was almost no demand for crude oil while oil producers were pumping barrels into the market leading to unprecedented oversupply of the market and slump in price.
Last year at the Nigeria Oil & Gas Opportunity Fair in Yenagoa, Bayelsa State, Coordinator, Contracts & Procurement and Nigerian Content, Total Upstream Companies in Nigeria, Alex Aghedo, who represented that former managing director, Nicholas Terraz, at the event, said the company would take Final Investment Decision (FID) on the Preowei project, if everything goes according to plan.
“Preowei project is currently in progress. It is going to be a subsea tieback to the Egina floating production, storage and offloading (FPSO) and hopefully if everything goes, according to plan, we want to make the FID this year (2019). If that is achieved, by 2021/2022, the field will start production,” Aghedo said.
TUPNL also suspended its planned Ocean Bottom Node (OBN) seismic survey on Preowei and Egina fields and has notified the geophysical firm that was supposed to carry out the job. The oil giant has also suspended the Front End Engineering Design (FEED) of Preowei and has notified the contractors handling the project.
Total Group in March this year, cut its capital expenditure (capex) by $3 billion as a result of slump in price. Total Group Chairman and Chief Executive Officer, Patrick Pouyanne, said the firm would cut its 2020 capex budget by more than $3 billion about 20 per cent reducing the 2020 net investments to less than $15 billion.
Preowei is about 25 kilometres north of Egina field. It has recoverable reserves of between 150-200 million barrels of oil equivalent. The field development plan was a subsea tieback to Egina field FPSO. If had started operation as planned, it would have been producing 50,000 barrels of oil per day at peak production.
TUPNL is the operator of OML 30 with 24 per cent equity shares, in partnership with Nigerian National Petroleum Corporation (NNPC); South Atlantic Petroleum Limited (SAPETRO) – 15 per cent; CNOOC E&P Nigeria Limited, a wholly owned subsidiary of CNOOC Limited –45 per cent; and Petrobras Oil and Gas BV – 10 per cent.