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NPA, oil companies rift threatens Engina FPSO production schedule

by ISAAC ANYAOGU

January 3, 2018 | 1:00 am
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Unless nipped in the bud, the threat by the Nigerian Ports Authority (NPA) to bar the Total Engina Floating Production Storage (FPSO) from entering Nigeria over Total’s refusal to use local towing services could upset the programme to ramp Nigeria’s crude output by 200,000 barrels per day (bpd) this year.

Abdullahi Goje, General Manager, Corporate and Strategic Communications of NPA had in a statement last Friday, said the Engina Floating Production Storage Off-shore (FPSO) due to arrive in January may not access the Nigerian waterways or berth at LADOL jetty due to “the refusal of the parties involved in the project to request for towage and pilotage service as required by law”.

Goje also accused international oil companies (IOCs) of failing to pay for pilotage dues and the NPA has with immediate effect, suspended service boats operations in all its pilotage districts until the full settlement of debts accruing from unpaid pilotage dues by IOCs and other beneficiaries of the services.

The main component on the Engina FPSO, currently sailing from South Korea to be coupled with its top side being fabricated at LADOL could suffer delay especially with a protracted legal fight which may derail plans to start production of 200,000 bpd in 2018.

However analysts say it may be too soon to sound alarm. “The deeper issue of IOCs avoiding use of local towing services which NPA is trying to enforce on Total. Considering the risks involved, Total would rather not use local companies for towing but would likely use local expertise for pilotage. Not sure its a big deal. It can be resolved without recourse to courts or legal action,” says Dolapo Oni, head of energy research at EcoBank.

But if the disagreement lingers, it could even impair Nigeria’s plans to ramp crude oil production by 2.3million bpd required to fund the 2018 budget and hurt revenue projections.

Nigeria’s 2018 budget of N8.6trillion is based on projected oil revenue of N2.442 trillion, and an oil benchmark price of $45 per barrel.

BusinessDay’s efforts to reach Charles Ebereonwu, Total’s spokesman were unsuccessful as his phone numbers were switched off and email inquiry also did not get a response.

Frank Ejizu, CEO, Samsung in Nigeria, who are partners to the project had said in November the Egina – FPSO would arrive in 90 days, in the last week of January.

“When it is fully integrated, it will create employment opportunities for Nigerians. The Egina FPSO has a storage capacity of 2.2m barrel of crude oil and a production of 108,000 barrel per day capacity.

“The Egina is 35 meters high, 330 meters long with a flare boom of 100meters high just as it has capacity to accommodate 200 people at a time. The $3.6billion Fabrication end of the Egina project is being handled by the Lagos Deep Offshore Base, LADOL, and it is more that 95 percent completed,” SAID Ejizu.

One of the biggest developments in Nigeria’s ultra-deep-water offshore, undertaken by Total and its partners Sapetro, Petrobras, CNOOC and the Nigerian National Petroleum Development Corporation (NNPC), the Engina FPSO is in water depths ranging from 1,400 to 1750m.

The construction has not proceeded without interest. Barely two months ago, the Senate Committee on Local Content demanded to know the Nigerian content of the multi-billion dollar FPSO of the Engina project due to the significant reevaluation of the project. Nicolas Terraz, managing director and chief executive of Total Upstream Nigeria Limited appeared before the lawmakers.

In the last four years alone, the project awarded at the sum of $3,1bn to Samsung Hyundai Heavy Industries (HHI) in 2012 has been revalued from $6 billion to $13 billion and $16 billion respectively and the senators fear they may not have been commensurate increase of the local content portion of the project.

However the NPA insist said their action is because operators have shunned previous reminders.

“Given the fact that the companies, some of whose indebtedness run into tens of millions of dollars outstanding for over two years ignored the advice given by the NPA, the Authority had no choice than to pursue this course of action, which has been communicated to all companies concerned,” the statement read.

The NPA says it would pursue legal remedies in its determination to ensure that no organisation impedes on the mandate of the NPA as provided in Part II of the Port Act.

 

ISAAC ANYAOGU

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by ISAAC ANYAOGU

January 3, 2018 | 1:00 am
  |     |     |   Start Conversation

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