Financial Energy Review
……..by Ben Ndubuwa…….
Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell plc, has announced its final investment decision (FID) on the Bonga North project, a significant deep-water oil development off the coast of Nigeria.
Bonga North will be developed as a subsea tie-back to the Shell-operated Bonga Floating Production Storage and Offloading (FPSO) facility, where Shell holds a 55% operating interest. The project includes drilling and completing 16 wells—8 production wells and 8 water injection wells—along with modifications to the existing Bonga FPSO and installation of new subsea hardware.
The development holds an estimated recoverable resource of over 300 million barrels of oil equivalent (boe), with peak production expected to reach 110,000 barrels of oil per day. First oil is anticipated by the end of the decade, ensuring the sustainability of production at the Bonga facility.
“This is another significant investment, which will help us to maintain stable liquids production from our advantaged Upstream portfolio,” said Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, in a statement issued on Monday.
The project underscores Shell’s commitment to leveraging near-field opportunities and its expertise in deep-water operations. The statement further highlighted that Bonga North will contribute to Shell’s cash generation efforts into the next decade, reinforcing its position as a leader in the global energy industry.
Bonga North is part of the larger Bonga field development, located in Oil Mining Lease (OML) 118, at water depths exceeding 1,000 meters. Production at the Bonga FPSO began in 2005, with a capacity of 225,000 barrels per day. In 2023, the facility celebrated a milestone, producing its one-billionth barrel of crude oil.
SNEPCo operates the Bonga field in partnership with Esso Exploration and Production Nigeria Ltd. (20%), Nigerian Agip Exploration Ltd. (12.5%), and TotalEnergies Exploration and Production Nigeria Ltd. (12.5%), on behalf of the Nigerian National Petroleum Company Limited (NNPC).
Yujnovich emphasized that the Bonga North project aligns with Shell’s broader strategy to simplify operations and replicate successful models. “Bonga North’s development is a testament to Shell’s technical expertise and strong partnerships. By focusing on near-field opportunities, we can drive performance benchmarks while contributing to energy security,” she added.
The investment in Bonga North is expected to generate an internal rate of return (IRR) exceeding Shell’s upstream business hurdle rate, according to the company’s statement.
Energy analysts have lauded the move, describing it as a bold step in sustaining Nigeria’s crude oil production amid fluctuating global oil prices. “Shell’s decision to invest in Bonga North reflects confidence in Nigeria’s oil sector and the opportunities presented by deep-water exploration,” said an industry expert.
As the project progresses, stakeholders are optimistic about the impact on Nigeria’s economy, particularly in generating revenue and employment. With first oil projected within the decade, the Bonga North development stands as a testament to Shell’s enduring role in Nigeria’s upstream oil and gas sector.
