Can you provide a comprehensive overview of Lekoil and the significant milestones the company has achieved over the past decade?

Certainly. Lekoil is a prominent energy exploration and production company with a portfolio of four valuable assets. Our flagship asset is OPL 310, an offshore block located approximately 20 km from Lagos, Nigeria. OPL 310 contains the Ogo discovery, which is considered the largest oil discovery in Nigeria in the last 10 years, boasting a production capacity of around 770 million barrels. This asset holds both oil and gas reserves and is situated in water depths ranging from 100 meters to 800 meters, conveniently close to the West Africa Gas Pipeline. With our ongoing development plans, we aim to explore further and plan appraisals for OPL 310 throughout 2020. It is worth noting that the gas reserves in OPL 310 are significant, capable of supplying approximately 20% of Nigeria’s power generation.

Another essential asset in our portfolio is OPL 325, in which we own a 62% stake. This exploration block is located approximately 100 km south of Lagos and is yet to be drilled. However, we have access to extensive 3D seismic data covering an area of 740 km2. Based on preliminary reviews of the prospects, we anticipate significant oil volumes of up to 5.7 billion barrels, with an estimated 2 billion barrels deemed recoverable based on analogues.

The Otakikpo marginal field serves as our third asset. It is a producing field currently delivering 6,000 barrels per day. Discovered in 2014, the field underwent swift development and commenced production within two years. Multiple hydrocarbon intervals were encountered through the drilling of three wells, and subsequent 2D and 3D seismic analysis revealed reserve estimates considerably surpassing initial acquisition projections. Notably, we have established a robust evacuation infrastructure for Otakikpo, ensuring over 95% uptime and minimal losses.

Lastly, we possess a 45% participating interest in OPL 276, which we acquired in 2019. The license area of OPL 276 has seen the drilling of four wells, resulting in four discoveries, two of which are oil and two gas. Preliminary resource estimates indicate gross recoverable volumes of 29 million barrels of oil and 333 Bcf (billion cubic feet) of gas, with additional upside potential of 33 million barrels of oil and 476 Bcf of gas. Currently, we are awaiting the license renewal to initiate work on this asset.

Could you provide more details on Lekoil’s flagship asset, OPL 310?

Certainly. OPL 310, situated in the Dahomey Basin, holds significant reserves of both oil and gas. The main prospects within OPL 310 are located at water depths ranging from 100 meters to 800 meters, and its strategic proximity to the West Africa Gas Pipeline is advantageous. We are at the early stages of developing this asset and plan to continue exploration activities and appraisal planning throughout 2020. The gas reserves within OPL 310 are substantial, with the potential to contribute to 20% of Nigeria’s power generation capacity.

What is the current state of exploration in Nigeria, and how can the government encourage further exploration activities?

When I returned to Nigeria in 2011, I recognized that Africa, including Nigeria, was underexplored. Today, I still believe that Nigeria remains underexplored. To promote exploration activities, the government needs to improve fiscal terms. The challenge lies in the fact that current fiscal terms are based on existing production, which is not attractive enough to incentivize exploration. Additionally, ensuring the sanctity of contracts is crucial in making exploration in Nigeria more appealing to investors. Contracts should not be subject to changes after discoveries, as this undermines confidence and discourages investment. I hope that the Petroleum Industry Bill (PIB) will address fiscal terms and that its enforcement will prioritize the sanctity of contracts.

Apart from fiscal uncertainty, what other challenges does Lekoil face in Nigeria?

Lekoil’s onshore operations are in close proximity to the coast, allowing us to leverage this advantage for efficient evacuation in case of security emergencies. Our commitment to building our own infrastructure has resulted in an evacuation system with over 95% uptime and minimal losses. Challenges exist across the entire industry, and our approach is to proactively anticipate and address them. Prior to commencing operations, we invested time in understanding the local communities, establishing Memorandums of Understanding (MOUs), and aligning community interests with ours. As the oil and gas industry operates on long-term timelines, thinking ahead and fostering positive relationships with communities is vital.

Is Lekoil considering involvement in the renewable energy sector?

Considering the global trajectory of energy demand, there will come a point where the fossil fuel industry may struggle to keep up. From Lekoil’s perspective, our energy mix includes a significant reliance on gas. Looking ahead, I believe the energy mix will shift further towards gas. This aligns well with our company, as gas constitutes a major part of our resource base. Consequently, updating the physical and legal infrastructure to support Nigeria’s transition to gas will be necessary. Lekoil’s vision has always been to be a leading exploration and production company focused on Africa. We aim to achieve our goals through skillful production, making a positive impact on the community, and striving to improve the lives of the people in the areas we operate in.

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