Costly delays fail to check Eland’s ambitions of acquiring new Nigeria fields

ABERDEEN-BASED Eland Oil & Gas has signalled it is eyeing fresh acquisitions in Nigeria although it hit costly delays on a project to revamp a field there, which had been shut in by Royal Dutch Shell in 2006 amid security concerns.

Chairman Harry Wilson indicated Eland is set to participate in what he called a scramble for assets in the country where the company aims to become the leading international oil company.

Aim-listed Eland said it took a significant step forward in February when it restarted production from the Opuama field on the OML 40 licence, which it had hoped to bring onstream in the first half of 2013.

Eland’s enthusiasm does not seem to have been dimmed by the high profile increase in actvity by the Boko Haram Islamist group, which abducted more than 200 school girls.

In the company’s annual results announcement, Mr Wilson said: “The increasing awareness of Nigeria’s potential is reflected in the scramble for assets being disposed of by the majors in recent months. We are of course looking at these and other assets and l ook forward to updating our shareholders on this front and with further progress on OML 40 over the coming months.”

The company has faced challenges operating in Nigeria. Pre-tax losses widened to $25.8m (£15.4m) in 2013 from $14.2m in the preceding year.

“The Group performance in 2013 was significantly impacted by the delay in securing initial production from OML 40. The delay in production resulted mainly from contracting and procurement issues throughout the year,” said chief financial officer George Maxwell in the results.

Production from Opuama was shut in for most of March and early April following a subsea pipeline leak at Shell’s Forcados Terminal through which it is routed.

Eland said Opuama is currently shut down while one minor pipeline leak is repaired. It expects production to restart in the next week.

However, chief executive Les Blair said the field had achieved encouraging rates of production wh e n onstream, stabilising at over 3,500 barrels of oil per day.

He said Eland’s task is to improve on the reliability of the infrastructure and attain the consistent production levels which are achievable.

Eland expects to increase production to around 7,000 bopd by the end of 2014.

Asked if it had any concerns about increasing investment in Nigeria amid heightened Boko Haram activity, Eland declined to comment.