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Otakikpo Onshore Terminal: Stakeholders See Crude Production Cost Dropping To $10/b

by Nse Anthony - Uko
3 weeks ago
in Business
Otakikpo Onshore Terminal
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Nigeria’s oil industry is poised for a dramatic reduction in production costs following the development of the Otakikpo Onshore Crude Oil Export Terminal, the country’s first indigenous onshore terminal in over five decades.

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Industry leaders and independent producers say the new facility, developed by Green Energy International Limited (GEIL) in Rivers State, could slash crude output costs from between $25 and $40 currently to as low as $10 per barrel—a level previously seen only in global low-cost producers like Saudi Arabia.
GEIL, which operates the Otakikpo Marginal Field under Oil Mining Lease 11, on Wednesday, took industry operators and oil sector analysts on a facility tour of the groundbreaking crude storage and evacuation terminal, a strategic infrastructure expected to drive a decisive shift toward cost-efficiency and national energy self-reliance.

Operators in the sector have identified evacuation bottlenecks as a major obstacle to achieving the federal government’s target of three million barrels of crude oil production per day.

Despite possessing over 37 billion barrels in crude oil reserves, Nigeria has struggled to produce more than 1.5 million barrels per day over the past three years. This shortfall is largely attributed to persistent attacks on pipeline infrastructure and widespread oil theft.

Speaking after the tour, the executive coordinator at the Independent Petroleum Producers Group (IPPG) Secretariat, Oyeleke Banmeke described the 750,000 barrels capacity as a progressive project that addresses critical infrastructure deficits in Nigeria’s oil and gas industry.

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While expressing excitement over the successful completion of the first indigenous onshore crude export facility in more than five decades, he said the economics of the facility makes it a major boost especially for indigenous oil producers.

“So you would have seen about seven or eight member IPPG companies here today. And the feedback has been very positive. They have been very impressed with what they see. It is shocking that we have a terminal, an onshore terminal, that can take 250,000 barrels of oil a day. And we talk about energy security every time. We talk about production growth. But we have never talked about the infrastructure to manage it.

“And if you look at it, we have an infrastructure deficit across the entire value chain for the oil and gas industry. So now you put this kind of thing in place. What it has done for us is to ensure reliability. It has helped us to ensure availability and, finally, resilience of infrastructure”.

Banmeke who led the IPPG delegation that included officials from Aradel, Heirs, Frontier Oil amongst other indigenous operators congratulated GEIL for achieving the fit, assuring that with the right economics the facility would reduce the cost per barrel for the operators in the area.

While acknowledging recent improvements in reducing production losses, attributing progress to government efforts and better infrastructure, he stressed that evacuation remains a major bottleneck, with a significant portion of Nigeria’s oil products facing export challenges due to insufficient infrastructure.

He emphasised that the terminal would help mitigate losses often experienced in pipeline transport, improves product security, and offers tailored, flexible solutions for independent producers.
Chairman of GEIL, Prof. Anthony Adegbulugbe, on his part, said the onshore terminal stands as a testament to Nigerian capability and resilience.

According to him, the Otakikpo Terminal was developed on what was once a swampy site, transformed through the efforts of Nigerian contractors and local partners.

Prof Adegbulugbe also noted that over 90 per cent of the contract value was awarded to indigenous companies, including CACASA and West African Ventures, showcasing the strength of local expertise.

Despite numerous obstacles—including pipe buckling, weather delays, and sunken barges—the project was delivered ahead of schedule, a testament to Nigerian engineering and teamwork. Prof. Adegbulugbe declared the terminal a clear statement of Nigeria’s readiness to take a leading role in global energy security and economic prosperity.

According to him, the Otakikpo terminal is more than infrastructure; it represents the potential to unlock over 40 stranded oil fields, boosting Nigeria’s crude production capacity beyond 3 million barrels per day.
Prof. Adegbulugbe called for a strong alliance between the Nigerian National Petroleum Corporation (NNPC) and indigenous operators to rapidly expand upstream and midstream infrastructure.
He noted that GEIL has already identified five additional terminals that must be constructed to support President Bola Tinubu’s renewed hope agenda, adding that the company is eager to partner with NNPC to redefine Nigeria’s position as a global energy leader.

Managing director of the Otakikpo Oil Terminal, Kayode Adegbulugbe, likened the cost-saving benefits to carpooling: “If you stay in Lagos and drive your own car to work every day, you spend more. But once you decide to carpool, you start saving. This is exactly what this facility brings to the market. It provides an option to store crude and eliminates evacuation challenges”.

Adegbulugbe emphasised that the terminal will reduce both capital and operational expenditures by allowing producers to store crude locally, which is expected to cut production costs by at least 40 percent.

“When oil is stored in tanks, it lowers the cost of production per barrel significantly. The operational expenditure is also set to reduce, and the cost of production per barrel will reduce. This facility will ensure that the costs will drop by at least 40 per cent,” he said.

Also speaking, Head of Energy and Power at Fidelity Bank, Emeka Nkemakolam, urged marginal field operators to revisit stranded assets, saying the new ATIL facility offers a cost advantage that could transform previously unviable projects.

At the project tour, Nkemakolam stressed Fidelity Bank’s long-term commitment, saying, “Our backing is not transactional, it is foundational. We have long supported indigenous operators, helping raise the millions needed to bring assets into production, and we will stay committed as they transition to new infrastructure.”

Many assets were uneconomical due to lack of evacuation infrastructure,” Nkemakolam said. “Now, with this facility, the economics change — and if your current bank does not understand, come to us,” he said.
Time is short, as marginal field licences expire if unused within two years, and the government urgently needs production to secure royalties. Fidelity believes the facility could help Nigeria push production from two to three to five million barrels daily over the next five years.


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