Erha PSC: ExxonMobil Opts For Amicable Resolution

ExxonMobil has re-stated that it remains open to working directly with the Nigerian National Petroleum Corporation (NNPC) and the Federal Government to amicably resolve the disagreement over the parties’ respective entitlements to lift crude oil under the Erha Production Sharing Contract (PSC).

The government had in 2008 jettisoned the terms of the PSC which stipulates that the contractor (the operator of the field) is to determine how the crude oil is split.

Investigations show that the government took a unilateral action in the matter, which culminated to the seizure of crude oil volumes from Agip, Mobil and Shell valued between $7 billion and $8 billion, according to reports.

This led to the three IOCs taking the NNPC before arbitration panel seeking restitution over the alleged crude oil grab.

In an official reaction to The Tide enquiry, ExxonMobil explained that its affiliate, “Esso Exploration and Production Nigeria Limited (EEPNL) is the operator of the Erha block under the OML133 Production Sharing Contract (PSC) with the Nigerian National Petroleum Corporation (NNPC).

“The Erha contractor is comprised of EEPNL (56.25 per cent) and Shell Nigeria Exploration and Production Company Limited (SNEPCO) (43.75 per cent),”the company indicated.

The statement confirmed that hearing on the arbitration ended in March 2011, adding that the parties were awaiting an award by the tribunal.

It, therefore noted that it would be impropriate to comment on the specifics of the matter.

EEPNL began production from the Erha deepwater development field located approximately 60 miles (97 kilometres) off-shore Nigeria in 3,900 feet (1,200 metres) of water in 2006.

The development, according to reports, includes Erha and Erha North, a satellite development due to come onstream before the end of this quarter.

It is the company’s first operated production from Nigeria’s deepwater Block 209, and expected to ramp up to 150,000 barrels of oil per day while Erha North will contribute another 40,000 barrels daily by year end for a total production output of 190,000 barrels per day. Erha North will be on production for 30 months.

Associated natural gas production from these projects will be approximately 300 million cubic feet a day which will be reinjected for reservoir management.

The Erha and Erha North developments consist of 32 Subsea wells tied to a Floating Production Storage and Offloading (FPSO) vessel.

A single point mooring buoy, one of the world’s largest, will be used for crude carrier docking and production transfer.

ExxonMobil’s Senior Vice President, Stuart McGill said Erha and Erha North are another demonstration of ExxonMobil’s global project execution capability and deepwater technology expertise.

“Along with our other successful West Africa deepwater developments, Erha and Erha North are helping global demand for oil”, McGill noted.

“In addition, these major projects demonstrate our continued commitment to support Nigeria in meeting her energy needs”, he said.

Vivian-Peace Nwinaene