Mart Resources and its co-venturers, Midwestern Oil and Gas Company and SunTrust Oil Company, have inked a deal to develop a second export pipeline for the onshore Umusadege oil field in Delta State, Nigeria.
The new 54km Ogini pipeline, will be designed to transport Umusadege field oil production and increase the combined export capacity for the field, thereby reducing the risk of reliance on a single pipeline.
Moving the proposed project ahead, Shell Western Supply and Trading Company will purchase future Umusadege oil production as part of a crude oil purchase agreement (COPA).
Mart Resources CEO Wade Cherwayko said the COPA, which sets out the terms of future oil sales from the Umusadege field, will enable the company and the co-venturers to move ahead with plans for the financing, design, construction, ownership and operation of the Ogini Pipeline.
"In addition to mitigating the export risk, the Ogini Pipeline will also provide additional export capacity which is needed given the recent success of the UMU-9 well and anticipated future production levels from the Umusadege field," Wade added.
The pipeline will connect the Umusadege field to Shell Nigeria's export pipeline at Eriemu.
Throughout the initial five-year contract, which has an option to be extended, the Umusadege crude oil is expected to be sold at a premium to Brent oil price.
Mart expects that Umusadege oil will continue to be exported to Nigerian Agip Oil Company in accordance with its existing crude handling agreement.
Engineering and design of the pipeline are in the initial stages and will accommodate both existing and future expanded production levels from the Umusadege field, which contains 13 known multiple-horizon hydrocarbon reservoirs.
The pipeline will be owned and operated by a pipeline operating company formed in part by Mart and the co-venturers, and construction is expected to take one year.
Image: A proposed pipeline will serve as an alternative export pipeline for Umusadege field. Photo: ka1970.