NCDMB, NNPC, IOCs Sign MoU to Reduce Contract Cycle

•Target contract cycle not more than six months 

•Seek to reduce cost, drive efficiency in oil, gas industry

Emmanuel Addeh in Abuja, Peter Uzoho in Lagos and Olusegun Samuel in Yenagoa

The Nigerian National Petroleum Company Limited (NNPC) and the Nigerian Content Development & Monitoring Board (NCDMB) yesterday signed a Memorandum of Understanding (MoU) with the international oil companies (IOCs) to reduce contracting cycle by 81.6 per cent.

At the least, this would mean cutting the current cycle to an optimal level of not more than 180 working days from the current 327 days.

The deal was signed at the NNPC Towers in Abuja, according to separate statements from the national oil company and the local content board.

On its part, the NNPC stated that the move was a demonstration of its commitment to the efficiency mandate as enshrined in the Petroleum Industry Act (PIA), hinged on developing an industry framework for an optimised contracting cycle.

According to the NNPC, the deal was expected to improve the ease of doing business, reduce cost and drive efficiency which will eventually translate to production growth, increased revenues, and ultimately improved profitability.

“The MoU is also expected to contribute significantly to the double-digit economic growth rate agenda of the federal government and generate tremendous value for all the stakeholders which include investors, companies, host communities and the nation at large.

“Key benefits of the framework in the MoU include a reduction of the contracting cycle for open competitive tender, selective tender, and single sourcing tender to 180, 178, and 128 working days respectively compared with the current best effort performance of 327, 333, and 185 working days respectively.”

Speaking at the MoU signing, the NNPC Group Chief Executive Officer, Mr. Mele Kyari said the event heralded exciting times for the nation’s oil and gas industry and stands as a bold testimony that the Company is plunging into the future of hope, productivity and success.

Kyari, who was represented on the occasion by NNPC Executive Vice President, Upstream, Mrs. Oritsemeyiwa Eyesan, added that with oil and gas as the bedrock of Nigeria’s economy, there was the need to get the contracting process in the industry right so as to get the economy back on track.

Besides, it was learnt that the new deal would enhance the goal of quickly ramping up Nigeria’s waning crude oil production, ensuring compliance with the provisions of the Nigerian Content Act, and timely approvals of documents.

 Also speaking during the MoU cum Service Level Agreement (SLA) with the NNPC and five international oil-producing companies, the Executive Secretary, NCDMB, Simbi Wabote, described the MoU signing as a way forward and a critical step towards enhancing the nation’s crude oil production.

Other top industry officials who signed the agreement included the Managing Director of Shell Petroleum Development Company (SPDC) and Country Chair, of Shell Companies in Nigeria (SCiN) Mr. Osagie Okunbor, and the Chairman and Managing Director of ExxonMobil’s affiliates in Nigeria, Mr. Shane Harris.

Others included the Director of Joint Ventures for Chevron Nigeria, Mr. Iwueze Cosmas; the Managing Director, Nigerian Agip Oil Company Ltd, Mr. Fabrizio Bolondi, and the Executive Director, Joint Ventures, Total Exploration and Production Nigeria, Mr. Obi Imemba.

The executive secretary stated that the overall goal was to conclude the oil and gas industry’s tendering to contract award processes within six months, affirming his conviction that the target is realistic with all key parties now on board with the execution of the SLA.

He expressed delight that NNPC  signed up to the MoU, being the senior partner of the joint ventures and concessionaire of the Production Sharing Contracts (PSC) arrangements that govern the operations of the industry.

Wabote recalled that NCDMB first introduced the 15-day rule to the industry in 2017, when it promised that it would respond within 15 working days to any formal request for approvals in relation to projects execution.

He noted that the rule was later formalised with an SLA in May 2017 with Nigeria LNG Ltd pioneering the process and breaking approval records in respect of the NLNG Train7 project.

“The industry found the outcome impressive leading to the Independent Petroleum Producers Group (IPPG) signing the SLA in 2018 and Oil Producers Trade Section (OPTS) thereafter,” he said.

Wabote, reaffirmed that NCDMB remains a business-enabling regulator, hinting that thus has been attested to by its being recognised and awarded as the most efficient amongst the government agencies in 2022 by the Presidential Enabling Business Environment Council (PEBEC).

“The SLA signed with the Nigeria LNG in 2017 was the first of its kind to be entered between a regulator and another entity in the oil and gas industry.

The template was adopted for managing documentation, contracting and expatriate quota applications between the Board and international and local operating companies,” the NCDMB added.

The agreement obligated NLNG to submit to the NCDMB documents like the Quarterly Job Forecast, Nigerian Content Plan, Bidders List, Nigerian Content Evaluation Criteria, Nigerian Content Technical Bid among others, while the Board had to respond on specific timelines.

Should the Board fail to respond in accordance with the provisions of the SLA, the company could proceed with its tendering process after informing the Board in writing or email.

Also, in their various remarks, the IOCs, represented by the MDs/Country Chairs of Shell, ExxonMobil, Chevron, TotalEnergies and ENI all pledged their commitment and support towards the implementation of the MoU for the benefit of all parties.