Nigeria’s vision 20: 2020 targets reserves of 40 Billion Bbls of oil and production capacity of 4 Million Barrels of oil per day (Bopd) by the year 2020 for the oil and gas sector. It is expected that production from deep offshore will significantly contribute to realizing this vision. In 1993, the first set of deep offshore blocks was awarded, most of which were, to the International Oil Companies (IOCs). However, the first legislation on deep offshore development was the Deep Offshore and Inland Basin Production Sharing Contracts Decree No. 9 of 1999 (deemed to have come into effect 1st January 1993) and its amendment – Decree No. 26 of 1999. The legislation defined deep offshore as any water depth beyond 200 meters. Forty-six deep offshore blocks were awarded between 1993 and 2007, when the last bidding round was completed. Sixty exploratory wells have been drilled leading to forty-two discoveries, about twenty per cent in commercial quantities. Though, only seven fields have been put on production at end of 2014. Final investment Decision (FID) was taken on one field (Egina field) in 2013, while FID is imminent for another field. This paper evaluates deep offshore petroleum development activities in Nigeria and assesses the contributions of deep offshore production to Nigeria’s aspiration to increase its reserves 40 Billion Barrrels and its production capacity to 4.0 Million barrels per day. Key challenges and constraints for offshore petroleum resource developments are reviewed and the outlook for Nigeria’s deep offshore resource development is appraised. The IOCs are expected to continue to dominate Nigeria’s deep offshore petroleum operations, but some will seek to divest assets to reduce risked-capital exposure. As the commercial discoveries decrease in size and development costs increase, it is expected that operators will seek to increase exploratory activities to find additional reserves. Of course, one can expect finding costs per barrel to decline as a result of economy of scale and scope. The uncertainty of fiscal terms and instruments embodied in the Petroleum Industry Bill (PIB) and the dwindling crude oil price, however, may delay the expansion of deep offshore developments in Nigeria.
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