NNPC Directs Oil Firms to Slash Cost of New Projects

The Nigerian National Petroleum Corporation (NNPC) has directed the International Oil Companies (IOCs) operating in the country to drastically cut over $30 billion they proposed as the cost of new products.

The projects have been stalled for several years due to the inability of the NNPC and the IOCs to reach an agreement on the costs.

Some of the projects, it was learnt, include Bonga South West, Bonga North East and Bonga North (Aparo), which are being proposed by Shell Nigeria Exploration and Production Company (SNEPCo), under a Production Sharing Contract (PSC) arrangement with the NNPC.

Some of the IOCs had accused the NNPC of deliberately stalling the execution of some of these multibillion dollar projects.

NNPC: We Won’t Bend Contracting Procedures for IOCs

The Nigerian National Petroleum Corporation (NNPC) has said that it would not compromise on its established processes of awarding contracts for major pending projects in Nigeria’s oil and gas sector to the benefit of International Oil Companies (IOCs).

Apparently raising eyebrows over media reports credited to some IOCs which had accused it of deliberately stalling the execution of some multibillion dollar projects in the petroleum sector, the acting General Manager Public Affairs of NNPC, Mr. Fidel Pepple, said in a statement in Abuja that the corporation will only adhere to established procedures in its contracting cycle than been made to compromise.

Pepple stated that the corporation will not be intimidated to abandon its firmly established process of contract award because of what it termed calculated media blackmail ostensibly by the IOCs and other interested parties.

He said in the statement that while the industry concern is normally expected in the processes leading to the award of major oil and gas projects, the NNPC has an established procedure of contract and project approval which includes conduct of economic analysis to establish project viability as well as the Federal Government’s interests from investments in the upstream.

The corporation also defended its Group Executive Director, Exploration and Production (GED, E&P), Abiye Membere, who was alleged to be behind a phantom contract splitting attempt of the Egina project as he allegedly did with the previous Bonga South-west project, saying that such allegation was totally misplaced and untrue.

Nigeria plans stable crude oil export from Bonga

There were indications that Nigeria would export five cargoes of Bonga crude in January, the same number of cargoes as December, according to the preliminary loading programme.
Three of the cargoes will be of 997,500 barrels capacity and two of one  million barrels. Also, Nigeria plans to ship four 950,000 barrel cargoes of Usan crude exports for January, one more than December, the loading programme showed.
This is the first shipping plan to be released for Nigeria’s oil exports in January. The other grades, including the country’s benchmark, Qua Iboe, were not yet available. The nations is scheduled to export six cargoes of Bonny Light crude in January, one less than a revised plan for December. The country will also ship two cargoes of EA Blend, one more than is scheduled to load next month, with one of the December shipments deferred until January, a separate programme showed.
The nation plans to export about 2.12 million barrels per day in December, unchanged from volumes in November, which hit a six-month high. Although, the nation experienced a temporary slide in oil productions that was due to floods, but the situation was quickly normalized and oil production was restored to about 2.4 million bpd.

NNPC’s Funding Delays Threaten Nigeria’s 4mbpd Target

The Federal Government’s crude oil growth projections of 4 million barrels per day (mbpd) and reserves of 40 billion barrels may remain a mirage as multi-billion dollar oil and gas projects expected to increase output and create thousands of jobs, are said to have been bungled by the Nigerian National Petroleum Corporation (NNPC).

The projects include ExxonMobil’s Erha North and phase two of the Satellite field development project, Shell’s Bonga Southwest and North-west, the multi-billion dollar Nsikko project, Total’s Egina project and the Funiwa Gas project, some of which had been in the pipeline for more than five years.

The reluctance by the NNPC to commit to the projects has prompted interested investors to pull out, while some of the projects have been abandoned.