It was champagne time in Lagos for marginal field operator Platform Petroleum when the chokes were turned on at its Asuokpu/Umutu field operations and the first oil from Nigeria’s marginal field program started gushing at 4,000 barrels of crude oil per day. Celebrating with Platform is little known Newcross Petroleum, a 40% JV partner.
For Platform and the program, it was a double milestone. Nearly four years after the award of 24 marginal fields to some 30 Nigerian indigenous companies, financial and technical challenges especially the former - have remained major hurdles on the journey to first oil. This jinx has now been broken by the PlatformlNewcross partnership. Unlike most others in the scheme who have been shopping the globe for interested technical and financial suitors, Platform and partners brought this field onstream without any offshore funding or technical support. The development is the climax of two years of field development work, which involved the testing and completion of two wells, design, construction, installation and commissioning of a 10,000 bpd flow station and 48 km of delivery pipeline as well as ancillary facilities.
The 24 marginal fields were licensed in 2003 as part of the government’s quest to ensure rapid involvement of Nigerian companies in the nation’s crude oil exploration and production business. Since then, it has been an uphill task for them as the expected technical and financial supports have been tough in coming their way. One of the companies had in 2005 made a premature announcement of first oil when its field flow-tested about 1,000 bpd, but was quickly plugged because of sand production problems arising from a poorly designed re-entry work program. One other has had to suspend work due to the on-going Niger Delta community problems.
Briefing newsmen Friday in Lagos, Managing Director of Platform Petroleum Austin Avuru, said the company was able to overcome these challenges through the joint-venture arrangement with Newcross Petroleum which enabled them to fund the project through a mixture of equity and debt that was entirely raised in Nigeria. Planned and executed at a cost of $30 million, Avuru said this was done without a foreign technical partner.
By this project, Platform Petroleum and Newcross Petroleum have initiated a new and very refreshing concept of cluster development as the facilities we have built are available.for use
by a cluster of four other marginal fields around us, thus promoting more efficient use of common facilities and more cost effective field development options. He said the company
would commence oil export once it concluded a sale and purchase agreement with the Nigerian Agip Oil Company (NAOC).
According to Avuru, the company went into agreement with Newcross Petroleum because of its belief in local content development, adding that the arrangement culminated in a farm-out agreement three months later. We were very reluctant from day one to form any relationship with foreign technical partners. So when we saw another company with an interest in the field, we were ready to pull our resources together and have the synergy to raise the capital required. We were impressed and the entire discussion took us three months and we had our operational and farmout agreements, Avuru said
We are here to stay as we have our strategy for growth. We will first of all stabilize by optimizing our production and revenue from the field development. Once we stabilize of course we have our growth strategy with other companies which include asset acquisition, long developed proven assets before we go into exploration risk of acquiring exploration acreages, Avuru concluded.
