Shell, NNPC Invite Bidders for $10bn Bonga South West Project

NNPC Looks to India for Help in Repair of Refineries

Ejiofor Alike, Peter Uzoho in Lagos and Chineme Okafor in Abuja

Exactly seven months after the Minister of State for Petroleum, Dr. Ibe Kachikwu, directed the Nigerian National Petroleum Corporation (NNPC) and Shell Nigeria Exploration and Production Company (SNEPCo) to commence the tendering process for the execution of $10 billion Bonga South West/Aparo (BSWA) deepwater project, the corporation and its partners have invited prospective bidders to tender for the project, THISDAY has learnt.

Kachikwu had in June last year directed the NNPC and its partners to commence the tendering process for the multi-billion deepwater project, which is expected to add 225,000 barrels of crude oil to Nigeria’s daily production by 2022.
The minister’s directive followed the April 17, 2018 meeting between President Muhammadu Buhari and a delegation from Royal Dutch Shell Plc., led by the Chief Executive Officer, Bern Van Beurden, in London, where a decision was reached that the oil giant and the NNPC would begin the implementation of projects that had been on the drawing board for several years.

The London meeting, which was facilitated by Kachikwu, also had in attendance the Group Managing Director of the NNPC, Dr. Maikanti Baru.
The meeting was said to have presented an opportunity to open investment talks of up to $15 billion to be invested by Shell in Nigeria.
THISDAY gathered from an official of the partners that SNEPCo and the NNPC have reached agreement on the key commercial terms necessary to move the development forward.

This agreement, it was learnt, covers related production sharing contract (PSC) interpretation disputes.
“It also sets an incentivising and fair framework for developing this world class opportunity while opening further opportunities in the prolific Nigerian deepwater oil and gas industry. We look forward to realizing the significant benefits to the Nigerian state, the Nigerian deepwater oil and gas construction contractors, their workforce and the investing parties as we progress towards investment decision, construction and start-up,” the official explained.

According to the project document obtained yesterday from the partners by THISDAY, “following the Oil Mining Lease (OML) 118 Heads of Terms (HOT) agreement, we are pleased to announce the release of BSWA Invitation to Tender, where Nigerian and international companies on the agreed bid list are requested to bid for the various contract packages that make up engineering, procurement and construction of the BSWA project. This is an important step that will allow ourselves, government and investing parties to understand the cost of the project and if within expectation, take the project to a Final Investment Decision (FID).” Estimated to cost about $10 billion, the Bonga South West/Aparo project, which has been on the drawing board for several years, is being executed by SNEPCo under a Production Sharing Contract (PSC) arrangement with the NNPC.

First oil from the project, which is expected to add 225,000 barrels per day of crude oil to Nigeria’s daily production, is expected in 2021 or 2022.
The BSWA project includes the construction of a new Floating Production, Storage and Offloading (FPSO) facility with an expected peak production of 225,000 barrels of oil per day.

THISDAY gathered that the BSWA field straddles Oil Mining Leases (OMLs) 118, 132 and 140.
However, the bulk of BSWA resources are located in OML 118 but it also extends into OMLs 132 and 140, operated by Chevron, where it is called Aparo.
SNEPCo is the operator of the BSWA project in line with the agreement between the NNPC, Esso Exploration & Production Nigeria (Deepwater) Ltd., Total E&P Nigeria Ltd., Nigerian Agip Exploration Ltd., Texaco Nigeria Outer Shelf Ltd., Star Ultra Deep Petroleum Ltd., Sasol Exploration and Production Nigeria Ltd. and Oil and Gas Nigeria Ltd.

Other key projects that have also suffered delays in Nigeria’s oil and gas industry include: the 120,000bpd Shell and Eni’s Zabazaba/Etan project in the disputed Oil Prospecting Lease (OPL) 245, ExxonMobil’s 140,000bpd Bosi project, ExxonMobil’s 110,000bpd Uge project and Chevron’s 100,000bpd Nsiko deepwater project.

The delays in the execution of these projects, which are estimated to cost about $23 billion, are largely caused by the lack of clarity of terms as a result of the non-passage of the 12-year-old Petroleum Industry Bill (PIB), and inadequate funding.

NNPC Looks to India for Help in Repair of Refineries

The Nigerian National Petroleum Corporation (NNPC) yesterday indicated it would be willing to accept technical assistance from India to repair its refineries in Kaduna, Warri, and Port Harcourt, which have a collective processing capacity of 445,000 barrels per day (bd), but have remained largely unproductive for years.

NNPC’s Group Managing Director, Dr. Maikanti Baru, reportedly told the Indian High Commissioner to Nigeria, Mr. Abhay Thakur, who paid him a visit that with the refineries up for repairs, the corporation would need technical assistance from Indian companies.

A recent report from the NNPC had indicated that the refineries made profit only once in the last 13 months, which is between November 2017 and November 2018, and recorded a consolidated trading losse amounting to N137.489 billion, in addition to operating at very low capacity utilisation.

Also, the corporation’s negotiation with financiers for a planned refineries revamp programme collapsed recently when parties could not agree on commercial terms to be adopted in the programme which was initiated to get the refineries working at optimal levels and contribute to Nigeria exiting importation of refined petroleum products by the end of 2019.

But Baru, in a statement signed by NNPC’s Group General Manager, Group Public Affairs, Mr. Ndu Ughamadu, in Abuja, explained that Indian companies in Nigeria have played some remarkable roles, and thus called on them to extend their presence to the downstream sector of the country’s petroleum industry to leverage on the enormous opportunities therein.

The statement noted that Nigeria and India pledged to work more closely to enhance energy security for both countries, adding that Baru also assured Thakur that NNPC would be committed to strengthening the existing relations between both countries in the energy sector.
According to the statement, Thakur earlier commended Nigeria for its support to India in the area of energy security, stressing that Nigeria had been contributing significantly to India’s energy needs.

He said India was open to further strengthening its collaboration with Nigeria through regular dialogue and exchange of technical know-how.
“Specifically, India is already sourcing almost 10 per cent of its energy requirement from Nigeria and we look forward to further strengthening of this cooperation across various sources of energy, not only oil, but also in gas, solar energy and other renewable sources,” the statement quoted him to have said.

He further commended the Minister of State for Petroleum Resources, Dr. Ibe Kachikwu, and Baru, for successfully hosting the recently concluded Nigerian International Petroleum Summit (NIPS), and assured of India’s continued support for Nigeria.