Foreign oil companies operating in Nigerian are reportedly interested in stepping up gas exploration in the Niger Delta in order to meet increasing worldwide demand.
According to Austin Avuru, president of Nigerian Association of Petroleum Explorationists, Shell, the leading foreign oil firm in Nigeria, is among a handful of oil companies, including Mobil, Chevron-Texaco and Total, that are expanding their gas exploration agenda in the West Africa country that leads the continent in oil production, Nigeria’s Guardian newspaper reported Wednesday.
The Nigerian government has been actively trying to promote more gas exploration as a means of creating more jobs.
Despite producing some $300 billion in oil revenue during the last three decades, many Nigerians live on less than $1 a day, a disparity that has prompted a militant backlash against the oil firms operating there.
Last week, oil and gas exploration company Exile Inc. signed an agreement with Sogenal Ltd., a local oil company, to take on a 40 percent development stake in the Akepo oil and gas field in the Niger Delta.
The shallow water field is said to hold gas reserves estimated at 80 billon cubic feet as well as 17 million barrels of oil.
“This would place the company at the forefront of the indigenous oil and gas business in Nigeria,” said Otunba Funso Lawal, chairman of Sogenal Ltd.
Akepo lies in 27 feet of water, near existing oil field developments and established export infrastructure, which bodes well for the future of gas extraction there, analysts said.
“Gas is a much more local undertaking because it’s not so easily transportable,” Edward Meir, an analyst for Man Financial told United Press International.
Gas demand is strong globally right now, noted Meir, as it’s “an energy source that is less reliant in the volatile Middle East” and has a distance advantage over oil in that it “sidesteps the refinery system.”
The disadvantage with gas, however, is that it “cannot be transferred over long distances unless it’s been liquefied,” Meir added.
“And of course there are environmental issues as well” he said, referring to the gas extraction process.
The Niger Delta is already at the heart of the country’s energy economy as the majority of the country onshore and offshore oil wells are located in the region.
In recent months, Nigeria’s leading militant group, the Movement for the Emancipation of the Niger Delta, has stepped up attacks against foreign oil installations and kidnapped many workers, causing production levels to decrease dramatically across the country and prompting hundreds of oil workers to leave.
MEND and other groups have been fighting for years for a more equitable split of profits from Nigerian oil production, contending that the majority of those living in the Niger Delta do not benefit from the billions of dollars being made in their country.
Critics of foreign oil firms also say the companies have contributed to the contamination of the environment in the Niger Delta, considered one of the world’s top five most-populated areas, according to a study released earlier this week.
Hoping to curtail the violence hampering Nigeria’s oil industry, President Olusegun Obasanjo ordered soldiers in the delta to take a hard-line stance against MEND in an effort to increase oil production.
Analysts note production is down by an estimated 700,000 barrels a day due primarily to foreign energy firms’ decisions to shut down facilities amid increasing hostilities.
Recent studies show production was down 20 percent in the Niger Delta due to the ongoing violence. Some officials say it is much higher, around 50 percent.