"When I came back to Nigeria in 2011, the first thing I said was that Africa and Nigeria is underexplored. Today, I still think the country is clearly underexplored. The only way for Nigeria to promote exploration activities is to improve fiscal terms. The challenge is that when our fiscal terms are priced based on existing production, it is not attractive enough for exploration."

Lekan Akinyanmi

CEO, LEKOIL

February 20, 2020

Can you give a brief overview of Lekoil and the company milestones over the last 10 years?

We have four assets of which our flagship is OPL 310, which has both oil and gas. The OPL 310 asset is offshore, 20 km from Lagos and contains the Ogo discovery which is the largest discovery in Nigeria over the past 10 years, producing about 770 million barrels.

Another important asset to note is OPL 325 of which we own 62%. This is an exploration block approximately 100 km south of Lagos. We have not yet drilled this block but have access to 3D seismic data over 740 km2. A preliminary review of the prospects suggests oil in volumes of up to 5.7 billion barrels with an estimated 2 billion barrels recoverable based on analogues.

Our third asset is the Otakikpo marginal field, which is a producing field delivering 6 000 barrels per day (bpd). The asset was discovered in 2014 and was brought into production within two years. Three wells drilled in the field encountered hydrocarbons at multiple intervals. 2D and 3D seismic analysis revealed reserve estimates considerably in excess of those available at the time of acquisition in May 2014. We have also put a unique evacuation infrastructure in place so that we have more than 95% uptime and no losses.

Our final asset is OPL 276 on which we have a 45% participating interest in. This asset was acquired in 2019. Historically, four wells have been drilled in the licence area, resulting in four discoveries (two oil and two gas) with preliminary resource estimates of gross recoverable volumes of 29 million barrels of oil and 333 Bcf of gas, with upside of 33 million barrels of oil and 476 Bcf of gas (recoverable). We are currently waiting to renew the license on the asset to start working on the block.  

Can you elaborate more on Lekoil’s flagship asset OPL 310?

OPL 310 is located in the Dahomey Basin and has both oil and gas reserves. The main prospects are in water depths ranging from 100 m to 800 m and are within close proximity to the West Africa Gas Pipeline. Lekoil is just starting to develop the asset and we will continue with exploration activities and appraisal planning in 2020. The gas reserve at the OPL 310 block is quite substantial and we have enough gas to produce 20% of Nigeria’s power generation.  

What is the current state of exploration in Nigeria and how can the government promote more exploration?

When I came back to Nigeria in 2011, the first thing I said was that Africa and Nigeria is underexplored. Today, I still think the country is clearly underexplored. The only way for Nigeria to promote exploration activities is to improve fiscal terms. The challenge is that when our fiscal terms are priced based on existing production, it is not attractive enough for exploration. I also believe that there has to be sanctity of contracts to make exploration in Nigeria more attractive. Deals cannot be changed after discovery as this does not help to encourage investment. I hope that the PIB will address fiscal terms and that the enforcement of the bill will promote sanctity of contracts.

In addition to fiscal uncertainty, what challenges does Lekoil face in Nigeria?

Lekoil’s onshore business is quite close to the coast and we have been able to leverage this in terms of evacuation in case of security emergencies. The reason why our evacuation has 95% uptime and minimal losses is because we built our own infrastructure. The entire industry has challenges and the best is thus to preempt. Before Lekoil started operations, we took time to understand the communities, put a MOU in place, and found a way to align community interest with ours. The oil and gas industry is long term and therefore we have to think ahead.

Is Lekoil looking to get involved in the renewable energy space?

If you look at the growth trajectory of the world, we are going to reach a point where the fossil fuel industry will actually not be able to keep up with global demand. From a Lekoil perspective, the energy mix includes gas and I believe that moving forward, the mix is going to shift more towards gas. This is very beneficial to the company as gas is a major part of our resource base. It will be necessary to update the physical and legal infrastructure to support the country’s move to gas. Lekoil’s vision has always been to be the world’s leading E&P company focused on Africa. We are trying to achieve our goals in terms of skill in production and our impact on the community. We want to make a difference in the lives of the people in the communities we operate in.  

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