Thursday, April 17, 2014

NNPC accuses Total of blackmail over Egina oil field project contract

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The NNPC said Total and other international oil companies cannot stampede it.

The Nigerian National Petroleum Corporation, NNPC, on Monday said it would not allow the acrimonious attacks by Total Upstream Nigeria Limited over the Egina oil field development to push it into abandoning its established process of contract award in the oil and gas industry.

Total, the French oil major which controls 24 per cent stake in the offshore concession located 150 kilometres off Nigeria’s coast, had accused NNPC’s management of deliberately stalling the execution of the oil field development project.

Plans for the signing of the contract for the project development scheduled for the end of 2012 appear not feasible as the year is fast running out; while the proposed commencement of oil production operations slated for 2015 would be delayed further.

Bid documents already issued to shortlisted bidders for the construction of a new floating production, storage and offloading, FPSO vessel, subsea umbilicals, risers and flowlines and subsea production system are still awaiting the approval of the NNPC.

The French oil major, in a statement last week, dissociated itself from publications attributing certain statements to it in respect of the contracting processes on the Egina Project, pointing out that it was not its policy to comment on such processes in the media.

But, the NNPC in a reaction by its Acting Group General Manager, Group Public Affairs Division, GPAD, Fidel Pepple, frowned at media reports accusing it of deliberately stalling the execution of some multibillion dollar projects in the petroleum sector, describing it as calculated blackmail by interested parties.

“NNPC has an established procedure of contract and project approval, which includes conduct of economic analysis to establish project viability and Federal Government’s take from investments in the upstream. The NNPC will not be stampeded or browbeaten into abandoning its firmly established process of contract award,’’ Mr Pepple said.

According to him, while the Industry concern is normally expected in the process leading to the award of major oil and gas projects, it was incumbent on all parties that the procedure be followed.

“The IOC’s (international oil companies) cannot stampede the Corporation into taking decisions that may be inimical to the nation’s interest because of their pecuniary interests,” he said.

He disputed reports that the NNPC has not held its periodic Group Executive Committee meetings to discuss some major projects, including TOTAL’s Egina deep offshore project, and endorse them to NNPC Board for approval, saying the meetings are held weekly or fortnightly.

On why Erha North Phase 2 and Egina Project contracts are yet to be discussed at the meetings, Mr Pepple attributed it to the insistence by the NNPC to critically review their overall economics in the light of their high cost estimates “to establish their validity, maximize Federal Government’s take and ensure comparative price competitiveness vis-a-vis benchmarks.’’

The NNPC also dispelled the allegation that it’s Group Executive Director, GED, Exploration and Production, Abiye Membere, who was accused of contract splitting attempt in the Bonga Southwest project, was also responsible for a similar offence in the Egina Project, describing such claims as totally misplaced and untrue.

“The alleged contract splitting of Bonga Southwest was never in the cards as there was never a time that SNEPCO (Shell Nigeria Exploration and Production Company) proposed three Floating Production Storage Production offloading facility, FPSOs, for Bonga Field Development.

“Engr. Membere also did not scuttle Bonga Southwest/Aparo Project six years ago. He was the GM (General Manager), PSC (Production Sharing Contract) Division of NAPIMS (National Petroleum Investment Management Services) in 2006 and helped to move forward the strategy for a leased FPSO project for Bonga Southwest /Aparo project. He was deployed from this position to another position in NNPC’s Engineering & Technical Directorate in 2007 during a routine Management re-organisation exercise,” the corporation said.

The Bonga South/Aparo, it said, was recycled for concept re-evaluation in 2009 in the wake of the dearth of bidders at the technical stage, with a potential of only one bidder emerging to the commercial stage of the FPSO tender.

“This decision to recycle Bonga was taken by NAPIMS Top Management and not Engr. Membere,” it said, adding that the report that the NNPC blamed lack of funding as the cause for the alleged lull in the execution of the project was untrue.

“This claim is untrue as there is no funding challenge in PSC because operators fund the investment 100 percent’’.

In spite of the attacks, the NNPC said it was focussed on its core mandate of ensuring that the Federal Government and Nigerians derived maximum benefit from the proceeds of the nation’s hydrocarbon resources.

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