April 3 (UPI) -- A memorandum of understanding with GE Oil & Gas could help lift more oil out of a Nigerian basin, regional exploration company Lekoil said.
Lekoil, a company focused on West African oil and gas production, said it signed a memorandum of understanding with the GE subsidiary to develop a work project for the Ogo oil field in Nigeria.
Lekoil CEO Lekan Akinyanmi said the Ogo field is a world-class discovery and the agreement with GE is just a first step toward development for the rest of the oil production license area.
"As we have previously announced, we are still in the process of securing ministerial consent for the remainder of the OPL310 acquisition and we remain confident that we will receive all the necessary approvals prior to the start of the appraisal program," he said in a statement.
Preliminary data for the Ogo prospect, based in tests from two wells, show recoverable reserves of as much as 774 million barrels of oil equivalent.
Lekoil said it estimates development will cost about $400 million. Under the terms of the arrangement, GE Oil & Gas will get a percentage of any cash flow generated by Lekoil from the Ogo field.
Secondary sources told economists at the Organization of Petroleum Exporting Countries that member state Nigeria produced 1.6 million barrels of oil per day in February, a gain of 3.7 percent from the previous month. Nigeria is exempt from an OPEC agreement to establish a ceiling on production because of the economic challenges presented by national security and sector-related issues.
The Nigerian economy sank into recession last year, with a contraction of 1.6 percent. With oil production centers in the Niger Delta the target of rebels, production faltered last year and the economy has hit hard by the strains of weaker crude oil prices.
According to the Central Bank of Nigeria, the rate of annual inflation is about 18 percent.