Chevron Nigeria: 2005 Report Card

The year 2005 was a year of great achievement for the Nigeria Mid-Africa SBU of Chevron. The company was particularly proud of its continued improvement in safety.
It reduced injury rate by 40 percent over the 2004 performance which was also 30 percent improvement over the previous year. That means that for a period of five years, it had improved its safety by nearly 100 percent. This is not all about statistics, but about behaviour which reflects the business unit’s safety programme.

The production target in 2005 was 220, 000 barrels a day net. The JV had excellent production performance at 164.6 BOEPD versus target of 161.8. Unfortunately, the ExxonMobil operated Chad Development (Chevron is 25% non-operating partner) achieved only 43.7BOEPD versus target of 57.8. It was the first time the company would accomplish its production target.
The company was very successful last year in its capital stewardship in projects the company was executing. When the drilling results are looked at, it will be discovered that the company spent $150 million to get 35, 000 barrels a day. That is pretty good result.

Other 2005 ccomplishments
The Nigeria mid-Africa (NMASBU) also has an impressive list of additional accomplishments in 2005, reflecting the diverse level of work and services required to manage the NMA business plan. The Nigeria JV achieved "Stretch" Production Target; Successful Swamp Re-entry, ramping up to 43 MBPD as well as an active exploration program.
In the Deepwater, the company had a couple of great discoveries in OPL 214 Uge operated by ExxonMobil and OPL 222 Efere operated by Total while it is also drilling an important well, Obo-1 in JDZ Block 1.
An important CARRY agreement was put in place last year to ensure that it was able to fund many of the JV projects. The achievements of the company are:
CNL JV Obokun Exploration Well - 9,000 BPD DST OML Conversion for OPL 216, 217 & 218 Farm-out of EG Block L and OPL 318 Approval of Carry Agreements for Mcji, Meren and Delta South.

Global MOU initiative
This is one of the company’s long term programs. The GMoU is a way to get communities more involved in the decision making of the development of their communities and to remove business and government from the middle of the process. The essence is that it should have better working relationship with the communities, have opportunity to dialogue with community people directly in a more meaningful way while the communities will have the opportunity to ensure sustainable development in their communities hopefully in a safe environment.

2006 path forward
While recognizing the solid performance achieved in 2005, it also planned to leverage those results and deliver an even better 2006. With all of the growth and changes, it is an exciting time to be in the Nigeria / Mid-Africa SBU. Expectations are high, and the company has the responsibility to deliver on our performance commitments. In 2006, the company wants to announce that it is already ahead of our production target per day. The company is better than what it had anticipated.

2006 Focus Areas
The top priorities are safety, improve reliability and base business performance, world-class execution of its major and capital projects
According to Jay Pryor, focus on the base business will be key to delivering 2006 NMA production performance. Efforts in the last couple of years to try and change production profile need to be coordinated. The production growth opportunity is good in the JV, Chad and Deepwater. Much incremental production is expected from the Swamp Re-Entry.

Significant Chevron investment in NMA
In 2005, the company’s budget in the CIEP was $1.6 billion dollars. In 2006, it is $2.5 billion. This means the business unit is getting the highest capital allocation within CIEP this year. This means more work and a big responsibility to deliver projects on-time and on-budget. The company has a lot of works to accomplish ... substantially more than in any other period in the history of Chevron’s Nigeria operations.
The NMA has a sustained investment of approximately $2.5 billion each year in the 2006-08 Business Plan. These projects are spread across the JV, Gas, Chad and Deepwater. This is likely to increase as Olokola LNG activities ramp up. Agbami is sucking much of the capital because it is nearing production.
Construction in Escravos Gas Project EGP3A and EGP3B has begun. These investments position NMA for reduced flares and commercialization of existing gas reserves.
The corporation is focused on growth, and it has challenged its subsidiaries to generate the next set of major capital projects that will deliver the future for Chevron. The Front End Engineering Design (FEED) for Olokola LNG Project is scheduled for the first quarter; Bonga SW/Aparo FEED involving four partners — the same period too while the drilling of Obo Well in JDA Block is scheduled for the first and second quarters. Nsiko FEED is for the fourth quarter.
Agbami is well into execution, and the company expects to see the hull floated out of the shipyard in 2006. Chevron has a 30per cent share of the Total operated Usan field in deepwater block OPL 222. Eight wells have already been drilled and the company is looking to complete the FEED work in 2006 to prepare for Final Investment Decision. First oil is targeted for 2010.
Flares-Out and Commercialization of Gas NMA is building a diverse Gas Business including a mix of national interest projects as well as regional gas distribution and LNG/GTL export. Chevron is dealing with trillions of cubic feet of gas in the JV Trillions more in the Deepwater. It must monetize those huge reserves.

IPP (independent Power Project)
One of the urgent needs in this area as well as in the country is additional power. The company elected to site a station to generate power close to Egbin Thermal Station. It wants to be part of the overall solution to power problem in Nigeria. Very little gas is used for domestic purposes in Nigeria. The company is working with CIEP to come out with a master plan for domestic gas in Nigeria. This will help the power business in Nigeria and also make it to explore for gas.
Nigerian Local Content
Chevron continues to take the lead in the support of Nigerian Local Content. The local content scope for the Agbami development is the most work done to date for an FPSO development. Chevron also supported a local company (VRMT) to establish laboratory facilities in Lagos for the advanced analysis of crude samples.
Remember... By maintaining focus on these three goals - safety, reliability and world-class execution - it will help ensure sustained competitive performance going forward.

Curled from (full Text): http://www.businessdayonline.com/?c=52&a=6889