Oil report

Exxon Mobil makes gas discovery off Nigeria

LAGOS, Nov 2 (Reuters) - The Nigerian subsidiary of U.S. energy giant Exxon Mobil XOM.N said it had made a rich gas condensate discovery approximately 75 km (47 miles) off the coast of Akwa Ibom state in the southeast of the country.

Mobil Producing Nigeria, a joint venture with state-run Nigerian National Petroleum Corporation (NNPC), said the discovery well in the Awawa Field in OML 104 was drilled to almost 3,500 metres and encountered 50 metres of condensate.

“Significant additional potential remains in untested deeper targets ... as well as in adjacent fault blocks,” the company said in a statement.

It said the discovery was part of a programme to increase oil and gas reserves and to supply power and natural gas to the growing Nigerian domestic market.

Despite being Africa’s largest oil and gas producer, Nigeria is saddled with chronic power shortages because of the poor condition of its domestic refineries and because weak regulation has put many investors off trying to solve the problem.

The government has introduced a new gas pricing regime to try to encourage foreign energy firms to decrease flaring and divert more of their gas towards the domestic power sector and help meet the country’s growing energy demands.

Gas demand from Nigeria’s power sector is expected to grow to 2.5 billion cubic feet per day by 2014 from 700 million now.

Presidential adviser on energy Emmanuel Egbogah said earlier the country had potential gas reserves of 600 trillion cubic feet but that gas was still being flared because there was not enough collection capacity in the system. [ID:nSGE6A10BL] (For more Reuters Africa coverage and to have your say on the top issues, visit: ) (Reporting by Nick Tattersall; editing by James Jukwey)