Shell shares (LON: SHEL) are down almost 1.5% today, as oil prices continue to show some weakness. Also today, Shell Nigeria Exploration and Production Company Limited, a subsidiary of Shell plc, has announced its commitment to proceed with the Bonga North deep-water project.
This significant move involves a final investment decision that marks a major step in the development of one of Nigeria’s key oil and gas fields.
The Bonga North project will be developed as a subsea tie-back to the existing Bonga Floating Production Storage and Offloading (FPSO) facility, in which Shell holds a 55% operating interest. This initiative is designed to enhance the production capabilities of the Bonga asset by connecting it to new reserves. The project entails the drilling and commissioning of 16 wells, consisting of eight production wells and eight water injection wells. These efforts are aimed at optimizing the efficiency and output of the extraction process.
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To accommodate the increased production activity, modifications will be made to the existing Bonga Main FPSO and new subsea infrastructure will be installed. This expansion is crucial for supporting the anticipated increase in output from the Bonga North development.
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Bonga North is expected to significantly bolster the oil and gas production capacity at the Bonga facility, with an estimated recoverable resource volume exceeding 300 million barrels of oil equivalent. At its peak, production from Bonga North is projected to reach 110,000 barrels of oil per day, contributing substantially to Nigeria’s oil output.
The start of oil production from Bonga North is anticipated by the end of the decade. Zoë Yujnovich, Integrated Gas and Upstream Director at Shell, highlighted the importance of this investment, stating it is vital for maintaining stable liquid production levels within Shell’s Upstream portfolio. Additionally, the project is strategically aligned to support Shell’s Integrated Gas and Upstream business operations, ensuring cash flow generation into the next decade.
Shell’s commitment to the Bonga North project is a testament to their long-term strategy to sustain and enhance oil production as a leading energy company in Nigeria. It demonstrates the company’s focus on maximising resource recovery while ensuring operational efficiency and profitability.
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