World Report

Indigenous oil firm Sapetro plans to spend cash on development of new fields

Sapetro’s new headquarters building, the 13-storey Sapetro Towers in Victoria Island, Lagos

lthough crude oil production began in Nigeria some forty years ago, there is hardly any indigenous presence in the upstream oil industry and Nigerians are only now beginning to gain a foothold downstream. All the more notable then is the success of South Atlantic Petroleum (Sapetro) which, having established itself as a leading exploration and production company in a relatively short time, recently concluded a mega-deal with China National Offshore Oil Corporation (CNOOC).

CNOOC agreed to pay Sapetro 2.3 billion naira (£10.8 million) for 45 per cent of Nigerian oil mining licence (OML) 130, which includes the Akpo deepwater oil field, one of Nigeria’s highest potential deep offshore fields. The deal is the largest to date by the CNOOC, which is targeting African oil producers like Nigeria in its drive to secure overseas reserves.

“My aspiration is to use Akpo as a springboard, not only for developing the rest of the block, only one-half of which is explored, but also to develop the Seme oil block in the Republic of Benin with the proceeds,” says General Theophilus Danjuma, Sapetro’s Chairman.

Located 100 miles off the coast of Port Harcourt, Akpo is estimated to have condensate reserves of over 600 million barrels and commercial natural gas reserves of 2.5 trillion cubic feet.

When fully operational in 2008, the field will pump 225,000 barrels a day, accounting for 9 per cent of Nigeria’s oil output. The cost of developing the field is put at £2.3 billion. CNOOC has said it will contribute more than £1.3 billion.

Theophilus Danjuma
Chairman of Sapetro

‘I will be looking for partners with expertise’

INTERVIEW

General Danjuma, a former defence minister in the first term of the Obasanjo administration, was awarded OML130 (formerly oil prospecting licence (OPL) 246) in 1998, during the military rule of General Sani Abacha. In 2004, the Nigeria National Petroleum Corporation (NNPC) took a 50 per cent stake in the block, in which Total of France and Brazil’s Petrobras also have holdings, subsequently agreeing a 20-year production sharing contract (PSC) with Sapetro.

Sapetro retains a 20 per cent stake in the other half of the block, along with Total and Petrobras, and is eager to explore other fields within it. The company bid successfully for the Seme oil block in the neighbouring Republic of Benin in 2004.

General Danjuma’s vision is for Sapetro to become the foremost indigenous producer of crude oil and gas in the West African region. He also has plans to go into the downstream sector by setting up an export oil refinery and a petro-chemical plant. “I will be looking for partners who have expertise in the running of the plants and also marketing of the products.”

The general says he believes it is time that British investors returned to the Nigerian oil and gas sector, although he adds: “They will find the competition, especially from oil-hungry Asia, a little stiffer than before, but the returns are better than almost anywhere else in the world.”