"The last 20 years have seen significant development in local content. Today, a characteristic of Nigeria is that it is a country that has both the competence and the history for oil and gas exploration and production. It is also recognized that the gas resources in Nigeria are so vast, but yet underexplored and underutilized.”

Heine Melkevik

MANAGING DIRECTOR, EQUINOR NIGERIA

March 16, 2020

Can you give an overview of Equinor and the company’s operations in Nigeria? 

Equinor Nigeria started operations in 1992, just as the first deep-water round came about in Nigeria. Through exploration, the company has made a couple of significant discoveries, one of them being what turned into the Agbami field as well as two deep-water gas discoveries, which is non-associated gas fields called Nnwa-Doro and Bilah. Further down the value chain, the company is  active on the marketing side and is involved in both importing products (gasoline, diesel, etc.) to Nigeria, and trading Nigerian crude in the international oil market.  

What differentiates Equinor considering the competitive landscape in the upstream sector?

Equinor is the world’s largest offshore operator – but we define ourselves as a broad energy company. In addition to looking for new business opportunities within oil and gas, we are building a large portfolio within renewable energy, especially offshore wind. We want to contribute to a low-carbon future, meaning that we are also aiming to significantly reduce emissions from our oil and gas operations. Our strength lies in our technology. Our Norwegian heritage is represented by the 67% of our shares held by the Norwegian government, indicating our roots and strong linkage to the value system of Scandinavia. Equinor’s company culture is one of transparency and good partnerships with local and international companies as well as  governments.

How does Equinor operate in agreement with the Nigerian government?

Equinor has a production sharing contract with the Nigerian government. As we are operating in deep-water, the agreement is different from a joint venture. Essentially, Equinor is a contractor for the Nigerian government, with responsibility for producing oil and gas resources.

In your opinion, what is the current state of the Nigerian oil and gas industry?

The last 20 years have seen significant development in local content. Today, a characteristic of Nigeria is that it is a country that has both the competence and the history for oil and gas exploration and production. It is also recognized that the gas resources in Nigeria are so vast, but yet underexplored and underutilized.

Equinor is a very large gas supplier to Europe and supplies 180 million people per day with natural gas. This is something we would like to see more of,also in West Africa.

As an observer, reforms are ongoing in the upstream oil and gas sector. It is going to be very crucial to see the reforms coming out in a way which is conducive and competitive for investment, and which creates a win-win situation for the investors, host communities and Nigeria. Nigeria is a country that has developed great capability in the oil and gas sector, but there is still room for much more gas utilization as well as oil production.  

What role can Equinor play in the move towards natural gas in 2020?

The development of gas resources takes time and it normally takes around five to six  years from investment decision to first production. Equinor wants to be the catalyst and force for engaging with those interested in really moving forward on deep-water gas development. We want to make gas, whether it is as LNG, LPG or domestic gas, a viable investment proposition for Nigeria. We want to end up in a situation where there are numerous gas projects which are to the benefit of Nigeria’s  industrialization and economic growth.   

What is Equinor’s experience with security risks and oil theft in Nigeria?

Equinor operates in deep-water and thus oil theft is not an occurrence. There are some piracy risks that we need to mitigate which significantly drives up the costs of the operation as we need additional measures in place. Although this challenge is not unique to Nigeria, it is a large feature of the Nigerian oil and gas industry.

There is some fiscal uncertainty with regards to operations in Nigeria, especially with the delay in the PIB. How is this affecting your operations?

Oil and gas investments are long term and therefore investors want to have as much certainty as possible. Your counterpart i.e. the host country, can do a lot to alleviate your uncertainty by showing consistency. Certainty, trust and consistency very often goes hand in hand. This is the same wherever we operate in the world. Countries that can provide a consistent policy package with good engagement with the stakeholders, generally attracts more capital at lower rates of return than countries that cannot provide consistency.

What is Equinor’s experience with local content?

The oil and gas industry in Nigeria is going to be here for a very long time and there is certainly the need to ensure that the people of the country are part of the growth of the industry. It is important to have a policy around local content, but it is also important to know that there is a limit and a balance that should be struck. Nigeria has taken good steps to ensure that the supplier market is competitive, transparent and fair, which is a prerequisite for local content.

Can you elaborate on Equinor’s sustainability initiatives in Nigeria, especially regarding the host communities where the company operates?

As we operate in deep-water, our host communities are conceptually all of Nigeria. Equinor is engaging with authorities to understand where the community needs are and where we can contribute the most. Our sustainability focus is on education, access to energy, health and equality and we match this with the pressing needs of Nigeria.

What are Equinor’s objectives moving forward?

Equinor aims to become a broad energy company. We are considering how we can compliment what we do offshore with what is potentially possible onshore.  We have been operating in Nigeria for a significant time and the plan is to continue operating in this market for many years to come. We aim to contribute positively to Nigeria’s future growth and development.

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