Cape Town — Nigerian oil production is set for a timely boost, climbing to around 2.2 million b/d by early next year with the startup of the giant 200,000 b/d Egina field, oil minister Emmanuel Kachikwu said Tuesday.
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Africa's biggest oil producer, Nigeria has not seen any major new oil projects in the last five years which makes the Total-operated Egina project even more pivotal.
The $16 billion deepwater project is the biggest oil and gas investment in Nigeria and will boost its plateauing crude production by over 10%. Production from the Egina field is due to start next month at around 150,000 b/d and could ramp up to 200,000 b/d after about six months.
"Egina should come into production in December or maybe January...Hopefully, that should lift us closer to 2.15 million-2.2 million by the start of next year barring any unforeseen shutdowns," Kachikwu said in an interview with S&P Global Platts on the sidelines of the Africa Oil Week conference in Cape Town.
Kachikwu said foreign investment in the sector had improved and was "reasonably good," noting that production could rise by a further 200,000-400,000 b/d over the next few years "if we get the right sort of financial investments that are required."
"Longer term it [the target] is around 2.5 million b/d and i think you could see it creep up to 3 million b/d in the next eight to 10 years," he added.
He said the Bonga Southwest and Zabazaba projects were the two upstream investments that could propel oil production further.
Nigerian output has been steady at around 1.6 million-2 million b/d over the past two years, below its full capacity of 2.2 million b/d. In 2016 output slumped to around-30-year lows of around 1.1 million b/d due to attacks on its key oil infrastructure in the oil-rich Niger Delta.
The minister added that oil output was just below 2 million b/d with crude accounting for around 1.6 million b/d and condensate comprising some 400,000 b/d.
Nigeria is due to go to the polls in February which could see the replacement of President Muhammadu Buhari who is seeking a second term in office. Despite initial concerns that militants may look to destabilize the country ahead of the vote, Kachikwu said he expects "relative stability" during the election process.
On OPEC, Kachikwu said he did not think the producer group would change its current output strategy despite it recently suggesting the need to tweak policy.
"I do not think there is a need for any action unless we fully know the impact from Iran," he added. "I think there is too much of an alarm. My advice to OPEC is always to be careful of these alarms...I do not believe a big change will be taken at the next meeting."
OPEC's Joint Ministerial Monitoring Committee recently expressed concerns about macroeconomic uncertainty and rising inventories saying it might require the group to change course.
OPEC and 10 non-OPEC partners led by Russia agreed in late June to reduce over-compliance with production cuts to raise output by a collective 1 million b/d to offset the impact of US sanctions on Iran and Venezuela's economic crisis.
Despite the sharp drop in prices from above $80/b a few weeks ago, he said OPEC was very comfortable with prices nearer to $70/b.
Meanwhile, Kachikwu said he was hopeful the government would pin down details on the overhaul of the country's refineries by the end of this year.
"Before the end of the year, we should see a sign-off and actually physical construction and works could start early-2019," he said, acknowledging that the process had been beset by delays.
Two weeks ago Nigerian National Petroleum Corp. said it was in talks with prospective financiers to carry out a major reform of its four ailing refineries aimed at substantially increasing local supply of oil products and ending imports.
The plan involves securing financiers' money to fund the refineries' repairs, with the investors reimbursed through the off-take of refined products from the plants.
The four refineries, which have a total capacity of 445,000 b/d, have operated sporadically due mainly to sabotage on pipelines carrying crude to the plants and technical problems after years of neglect.
Despite being such a key oil producer and exporter, Nigeria relies heavily on the international market to buy gasoline and gasoil to fuel cars and power generators.
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