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Nigeria is missing out in deep offshore infrastructure boom

Nigeria is missing out in deep offshore infrastructure boom

The advantages associated with Floating Production Storage and Offloading (FPSOs) vessels, over traditional semi-submersible oil rigs have positioned them as the preferred offshore infrastructure of the future for drilling oil fields, Nigeria may be missing out on this opportunity by delaying pending FPSO projects.

The latest global deals and investments are spurred by strong demand for FPSOs that operators are currently seeking to develop in oil and gas fields, especially in Brazil, Asia, and Africa.

There are 186 FPSOs currently in operation around the world, 43 of which are operating in African waters, this is just under 25 percent of the total. Ten percent of all FPSOs are operating specifically in West Africa, with one FPSO in Ghanaian waters, one off the coast of Mauritania, two in Cote D’Ivoire, and 14 off coastal Nigeria.

Particularly when focussing on deep-water fields, European FPSO developments are experiencing a slower rate of advancement than the West Africa region, and with a population equal to that of the United States, and a massive maritime zone of control, more attention should be paid to those waters. This is an opportunity Nigeria can latch on to by creating clarity through competitive fiscal terms and a legal framework that guarantees the sanctity of contracts in the country’s oil and gas sector.

Malaysian FPSO vessel owner and operator Yinson Holdings is shopping for very large crude carriers in anticipation of possible FPSO conversion jobs for which the company is currently bidding.

The company last week reached agreements to buy two VLCCs respectively from Ridgebury Tankers and Neda Maritime Agency.

Addressing Yemi Osinbajo, vice-president of the Federal Republic of Nigeria on August 10, 2018, during his tour of the Egina FPSO, Bayo Ojulari, managing director of Shell Nigeria Exploration and Development Company (SNEPCo) said about seven more FPSO vessels will be built in the next 15 years. But Ojulari added that Egina was possible because of government support. This highlights the critical role of government.

In his remarks after touring the huge FPSO, then Acting President Osinbajo said the Egina project showed the need for the Federal Government to continue to ensure an enabling environment for businesses to thrive in the country.

Some FPSO projects in the pipeline in Nigeria include the Zabazaba deepwater project being executed by Nigerian Agip Exploration Limited (NAE) in partnership with SNEPCO in Oil Prospecting License (OPL) 245 and the Bonga South West Aparo (BSWA) deepwater project being developed by SNEPCO.

Three contractors with active interest in building the BSWA 150,000 barrels per day FPSO include South Korea’s Samsung Heavy Industries, with a base-case proposal, said to involve using the SHI-MCI yard in Lagos which most recently handled the FPSO integration work on Total’s Egina project.

A consortium of China’s Offshore Oil Engineering Company (COOEC) and Italy’s Saipem are also in the race. Iain Esau and Xu Yihe, analysts at Upstreamonline.com, an online platform that provides oil and gas news reported July 4 that an informed source said COOEC would build the topsides but would outsource hull fabrication work to other yards in China. Saipem will deal with the challenging local content aspect of the project.

A third group believed to be preparing to submit bids documents is China’s CIMC Raffles and Monobuoy, a Lagos-based engineering concern with a United States of America parent company.

CIMC was previously expected to tie up with Kavin Engineering and NOV, and it is not known if these two contractors remain involved.

Indications emerged earlier that major contractors bidding for Zabazaba submitted competitive costs and concrete plans to fabricate and integrate over 50 percent of the FPSO topsides in-country.