NNPC, Shell Still Negotiating $10b Bonga contract
Royal Dutch Shell and its partners will decide next year on whether to go ahead with the development of Nigeria’s Bonga Southwest offshore oilfield, it was gathered yesterday.
Managing Director, Shell Nigeria Exploration and Production Company, Bayo Ojuli, told reporters that the project, one of the country’s largest with an expected production of 180,000 barrels per day, will generate profit at below $50 a barrel.
He said Shell is currently negotiating a production sharing contract (PSC) with the Federal Government, through the Nigerian National Petroleum Corporation (NNPC) which will determine the viability of the project. The negotiations are expected to be concluded this year.
Shell operates the project and ExxonMobil, Total, Eni and the Nigerian National Petroleum Company are partners.
The Minister of State for Petroleum, Dr. Ibe Kachikwu, was said to have directed NNPC and Shell Nigeria Exploration and Production Company (SNEPCo) to commence the tendering process for the execution of the deepwater project.
The report said Kachikwu’s directive followed the April 17, 2018 meeting between President Muhammadu Buhari and a delegation from Royal Dutch Shell Plc., led by its Chief Executive Officer, Bern Van Beurden, in London. A decision was said to have been reached the implementation of projects be started.
The London meeting, which was facilitated by Kachikwu, also had in attendance the Group Managing Director of the NNPC, Dr. Maikanti Baru.
The meeting was said to have presented an opportunity to open investment talks of up to $15 billion to be invested by Shell in Nigeria.
First oil from the project, which is expected to add 225,000 barrels per day of crude oil to Nigeria’s daily production, is expected in 2021 or 2022.
Other key projects that have also suffered delays in the industry include: the 120,000bpd Shell and Eni’s Zabazaba/Etan project in the disputed Oil Prospecting Lease (OPL) 245, ExxonMobil’s 140,000bpd Bosi project, ExxonMobil’s 110,000bpd Uge project and Chevron’s 100,000bpd Nsiko deepwater project.
The delays in the execution of these projects, which are estimated to cost about $23 billion, are largely caused by the lack of clarity of terms as a result of the non-passage of the 18-year-old Petroleum Industry Bill (PIB), and inadequate funding.
However, following the meeting between the president and the Shell executives, Kachikwu directed the NNPC to conclude all the processes leading to the execution of the Bonga South West project latest by Monday, June 18.
