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NNPC, Chevron May Clash Over $4bn Project

Posted by By Mike Oduniyi on 2005/08/05 | Views: 846 |

NNPC, Chevron May Clash Over $4bn Project

Nigerian National Petro-leum Corporation (NNPC) and US oil giant, Chevron Nigeria Limited may be heading on a collision course over the implementation of the local content agreement in the development of the $3.5 billion (N465.5 billion) Agbami Deepwater oil field.

Nigerian National Petro-leum Corporation (NNPC) and US oil giant, Chevron Nigeria Limited may be heading on a collision course over the implementation of the local content agreement in the development of the $3.5 billion (N465.5 billion) Agbami Deepwater oil field.

Also, a US-based oil services firm, Baker Energy, yesterday, announced the award of a contract from South Korea’s Daewoo Shipping and Mari-time Engineering (DSME) for the provision of Operations Assurance Services for the Agbami Floating Production Storage and Offloading (FPSO) project.

THISDAY checks revealed that the award came on the heels of a deluge of complaints from Nigerian indigenous companies to the NNPC that some of the jobs earmarked for execution in-country were finding their ways abroad.

The agreement reached between the NNPC and Chevron for the development of the Agbami oil field, included that 300,000 man-hours or 40 percent of the total man-hours that will be spent in constructing the Agbami FPSO vessel should be allocated to Nigerian companies, and that 7,000 tons of fabrication of the entire FPSO be carried out in the country.

Sources at the Nigerian Content Division of the NNPC however, said some of the packages have been awarded to foreign companies on grounds that local companies lacked the capacity to handle the volume of work already earmarked.
“The company (Chevron) is saying that before now, there were certain companies that had initial preferences, but that they have reviewed them and they (the local firms) don’t have the capacity to do all the jobs and that other foreign companies located in Nigeria should do part of it,” said a source.

The development plan for the Agbami project is divided into four contract packages namely, the FPSO engineering, procurement and construction; Subsea Equipment Contract; Subsea Installation Contract; and the Offloading System Contract.
Already, the FPSO EPC contract has been awarded to South Korea’s Daewoo at the cost of $1.1 billion. France's Technip got an $800 million contract from Chevron to supply the umbilicals, riser and flowlines (URF).

Daewoo was to further sub-contract to the engineering design and procurement services for the topsides of the FPSO to Halliburton subsidiary, KBR, for an undisclosed sum. This sparked protest from the House of Representatives.

The cost for the latest contract to Baker Energy was also not disclosed although the company said it was a multi-million dollar contract. It is for the provision of process reliability modeling, workload analysis, the development of maintenance management systems; preparation of operations, maintenance and training documentation and the delivery of training programs.

The NNPC, which confirmed complaints from local firms, said yesterday it was keenly watching trends in the awards of contracts for the Agbami project, warning Chevron and Daewoo, the main contractor, to stick to the agreement on the local content input for the project.

The Group General Manager of the National Petroleum Investment Management Servi-ces (NAPIMS), Mr. Philip Chukwu said there were initial complaints by Nigerian engineering and fabricating firms of not being patronized by Chevron or Daewoo for jobs.

“We heard that the jobs being allocated are not sufficient, so we are working with Daewoo to see how they carry out the local content directive. Our position is however, that all the jobs we have said should be done in-country must be done in-country,” said Chukwu.

“The jobs are itemized. None of these jobs must be done outside Nigeria. We are sticking by the 300,000 man-hours for local jobs, the only thing that can stop it is if we don’t have the capacity. We have directed that they should go and search all the nooks and crannies of the country for engineering companies,” he said.

The NAPIMS boss said although the capacity of local contractors might not be that big, the NNPC he added, was trying to develop that capacity.
“But in order to continue to do the jobs in Nigeria, we are encouraging partnerships, Nigerian engineering firms to partner with international engineering firms, but the job must be done in Nigeria.

“Because local content is adding value to Nigeria, using Nigerian resources, including material and human resources,” said Chukwu
The Agbami field, which lies in OPL 216, will produce at peak 250,000 barrels of oil per day and 450 million cubic feet of gas. About 415 million standard cubic feet of gas will be re-injected. The FPSO is designed to store about 2.2 million barrels of oil and is set to be on location for more than 20 years.
Partners in the project include Chevron, Brazil's Petrobras, Statoil of Norway and NNPC.

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Comments (3)

Abieyuwa(Edo, Nigeria)says...

Otasowie means evening life is better than morning life. There is an error in your “evening life is better than evening life”?

Naija g(Houston, Minnesota, US)says...

Sokari doesn’t mean joy. Joy is Biobela. Go to the village and ask the meaning of the name.

Fay(Katy, Texas, US)says...

Actually translates to bravehearted.