1 week ago
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Indigenous oil and gas service providers, under the umbrella of Petroleum Technology Association of Nigeria (PETAN), have demanded that contracts worth $1.5 billion be awarded to local firms from Shell’s $5 billion Bonga North Project as a further proof of the country’s seriousness in promoting local content in the hydrocarbon industry.
Chairman of PETAN and Chief Executive Officer of Geoplex Drillteq Limited, Mr. Wole Ogunsanya, made the demand on Tuesday in Lagos, during his welcome address at the opening ceremony of the ongoing Sub-Saharan Africa International Conference and Exhibition (SAIPEC).
Ogunsanya said the $1.5 billion being asked by PETAN represented just 25 per cent of the entire Bonga North project.
The theme of the conference is, “Building Africa’s Future: Advancing Local Content and Sustainable Development in the Oil and Gas Industry.”
Shell Nigeria Exploration and Production Company Limited (SNEPCo), a subsidiary of Shell Plc, had last December announced a final investment decision (FID) on Bonga North, a deep-water project off the coast of Nigeria.
Bonga North currently has an estimated recoverable resource volume of more than 300 million barrels of oil equivalent (boe) and will reach a peak production of 110,000 barrels of oil a day, with first oil anticipated by the end of the decade.
However, a week after the announcement of the FID, Saipem, in a consortium with two Nigerian companies – KOA Oil & Gas and AVEON Offshore – were awarded an offshore contract of the project worth around $1 billion.
As part of the contract, Saipem will deliver the Engineering, Procurement, Construction and Installation (EPCI) of risers, flowlines, subsea umbilicals, and associated subsea structures for the Bonga North Project, located 130 kilometres offshore Nigeria.
Design and fabrication activities will be carried out locally, also involving Nigerian suppliers and subcontractors, the report added.
The contract had an overall value of about $1 billion, while Saipem’s share amounted to approximately $900 million.
But speaking on Tuesday at the SAIPEC, Ogunsanya said PETAN was excited about the several FIDs that had successfully been signed in Nigeria, including Shell’s $5billion Bonga North deep-water project.
He said, “As technical and service providers with three decades of operational excellence in the oil and gas industry, our member companies have the required capacity to develop major projects across the oil and gas value chain, including in deep-water offshore Nigeria and other African countries.
“PETAN represents 60-70 per cent of local content capacity in Nigeria. At PETAN, we have over 100 companies. Each of our members is represented by a CEO and executive directors.
“Our members are working in India, the Middle East, and across other African countries. The capacity is there and it’s now left for us to harness it.
“We aren’t asking for $3 billion dollar. But we are asking for $1.5 billion dollar in contract awards which is about 25 per cent of the entire project value. That is what we are asking for.”
He clarified that PETAN’s drive towards local content development was not in any way discouraging international partnerships for project development.
Ogunsanya stated that local content should be seen as a shared value between multinational companies and indigenous companies operating in the African oil and gas industry.
He stressed the need to increase indigenous companies’ participation in Africa’s oil and gas projects to retain value in-country as well as support the development of local content.
Ogunsanya maintained that the association was looking forward to participating in Shell’s Bonga North project and other key projects in the deep-water, shallow water, and onshore segments to continue to drive local content in Nigeria.
He added that the African continent had what it takes in human capacity coupled with its energy resources to develop the continent and provide the much-needed energy for the people.
Equally speaking at the SAIPEC, Managing Director of Shell Nigeria Exploration and Production Company Limited (SNEPCo), Ronald Adams, stated that Nigeria could meet its production targets and implement ambitious development programmes from deep-water oil and gas operations if it continued with policies to encourage investments and boost output in the sector.
“Deep water is a compelling consideration for Nigeria if the country must meet its oil production targets and implement ambitious development programmes,” Adams stated.
According to Adams, Nigeria’s deep-water fields are home to some of the world’s most promising associated and non-associated gas reserves, with vast untapped potential that can play a vital role in powering Nigeria’s future, supporting cleaner energy and contributing to global emissions reduction.
He said, “This will require a favourable investment climate to attract capital and innovation to develop these gas resources responsibly and sustainably, ensuring long-term benefits for the country in meeting its energy and global sustainability goals.”
Adams welcomed reforms by the Nigerian government to attract investments, especially the signing of three executive orders in February last year on tax incentives, local content compliance requirements, and reduction of petroleum sector contracting costs and timelines.
He pointed out that tax credits were also announced by the federal government for new investments in deep-water oil and gas.
Adams said the reforms should be part of a renewed strategy to attract investments “through fiscal and regulatory policies that are fit-for-purpose, forward-looking and competitive”.
He said for Nigeria to consistently reap the benefits of deep-water operations, it must address regulatory bottlenecks through streamlined and faster approval processes and consistent and fair policy enforcement.
Adams, who spoke on Shell’s vision for unlocking Nigeria’s deep-water potential, assured that the company would continue to leverage its expertise since it pioneered production at the Bonga field in 2005, which achieved one billion barrels export milestone in 2023.
He said the developments included the Final Investment Decision (FID) on the $5billion Bonga North deep-water project announced last year.
Adams said SNEPCo’s deep-water achievements had resulted in the payment of taxes and royalties to government, development of indigenous businesses through contract awards, and implementation of social investments across the six geopolitical zones in Nigeria.
He added, “Shell has powered progress in Nigeria and our vision is to build on our support and help the country to achieve energy security and economic development. We will do this by continuing to take innovative approaches to deep-water development, reducing costs and ensuring better and quicker returns for all stakeholders.”
In his keynote address at the occasion, Minister of State for Petroleum Resources, Dr. Heineken Lokpobiri, emphasised the need for African countries to share knowledge, close funding gaps and strengthen competitiveness in the continents oil and gas industry.
Lokpobiri said the government would remain committed to providing the enabling environment for businesses to thrive, but it could not achieve that alone. Africa must unite, he said.
“We must share knowledge, close funding gaps, and harmonise regulations to strengthen our competitiveness. Our greatest asset is our collective strength, and together, we can build a brighter future,” Lokpobiri stated.
Underscoring the power of local content, he said it was unlocking Africa’s true potential.
By investing in local businesses, nurturing the youth and transferring critical technology to the people, Nigeria and Africa were not just building an industry but also shaping their future, the minister said.
Lokpobiri said he had witnessed first-hand the transformative power of local content, pointing out that the successful divestment programme and empowering of indigenous companies to take ownership of marginal fields and shallow water assets stood as a testament to the shift.
He explained that the programme had not only enhanced oil and gas production capacity but also opened new opportunities for local businesses, service providers, and communities.
According to him, “Through the growth of Nigerian companies, we’ve seen a remarkable demonstration of technical expertise and operational efficiency, which has revitalised dormant assets, expanded production, and retained greater value within our economy.
“Nigeria is now a regional leader, proving that African nations can take full ownership of their resources and transform them into engines of prosperity.
“However, this journey is far from complete. The future holds even greater promise. With the right policies, access to financing, and technological support, indigenous operators will be able to tackle larger projects, make new discoveries, and play an even more dominant role in Africa’s energy future.”
Peter Uzoho
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