Canada’s Africa Oil Corporation is set to significantly expand its footprint in Nigeria by doubling its production to about 35,000 barrels per day after the completion of its deal for full ownership of Prime Oil & Gas Coöperatief next Tuesday.
According to a report by Reuters, quoting a senior company official, Africa Oil will take full control of Prime Oil, a Dutch entity that holds indirect stakes in deep-water Nigerian fields operated by TotalEnergies and Chevron.
“On closing of that deal, we will significantly change the scale of our business. We will double production, we double reserves and significantly boost our liquidity position,” Africa Oil’s chief commercial officer, Oliver Quinn told Reuters.
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Once the deal is finalized, Africa Oil expects to ramp up production to around 35,000 barrels per day. “They are very significant value barrels because they have very low lifting cost of under $10, so the margin on the barrels is high and typically sell at premium to Brent,” he said.
Quinn added that to maintain production in its mid-life fields, Africa Oil and its partners have planned an infill drilling campaign this year.
Beyond Nigeria, Africa Oil also has interests in Equatorial Guinea and a key stake in Namibia’s Orange Basin. Through its 40% holding in Impact Oil and Gas, the company has exposure to the new oil discovery.
TotalEnergies, the operator of the Venus discovery, is expected to make a final investment decision by 2026, paving the way for Namibia to emerge as an oil exporter by the end of the decade.
“Our focus is to add to the cash generation machine, which runs through the decade while on the backend Namibia Venus comes onstream and then we have significant growth in that asset,” Quinn said.
Impact on Nigeria’s oil output
This expansion by Africa Oil strengthens its position in Africa’s oil sector while it also eyes long-term gains from its investments in Namibia’s emerging petroleum industry.
In addition, the expansion will contribute to Nigeria’s crude oil output, which the federal government has vowed to increase.
Nairametrics reported that Nigeria surpassed its OPEC quota of 1.5 million bpd by 70,000 bpd. However, it falls short of its target of 2.06 mbpd.
What you should know
Last year, Africa Oil Corp. was granted a 20-year license extension for Petroleum Mining Lease 52 (PML 52) by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC). PML 52 includes a 62.46% interest in the offshore Agbami field.
- Its other operations in Nigeria currently include PML 2, PML 3, PML 4, and PML 52, which are operated by Chevron and TotalEnergies.
- According to the company’s website, the reservoirs in the fields produce light to medium sweet crude oil that is extracted using FPSO (Floating Production, Storage, and Offloading) systems.
