Saipem Wins $5.42bn Contract for Zabazaba-Etan Devt Project in OPL 245

Italian engineering, construction and drilling contractor, Saipem has won $5.42 billion contract for chartering, operations and maintenance for a Floating Production Storage Offloading (FPSO) tanker facility for the Zabazaba and Etan development project in Oil Prospecting License (OPL) 245, THISDAY has learnt.

THISDAY, however, gathered that the $2.96 billion of the contract price, which is expected to be spent in Nigeria in line with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010, is under threat.

This followed concern that the contractor is allegedly planning to use sister or affiliated companies to execute the local content scope of the project in violation of the NOGICD Act and the recommendations of the Nigerian Content Development and Monitoring Board (NCDMB).

Nigerian Agip Exploration (NAE) Limited and Shell Nigeria Exploration and Production Company (SNEPCo) signed the production sharing agreement at the ratio of 50:50 for the development of Zabazaba and Etan, where NAE is the operator.

NAE is developing Zabazaba field which has proven reserves of 560 million barrels of oil, as a standalone development, while Etan field, which is also in OPL 245, will be developed as a tie-back to Zabazaba.

The Zabazaba Deepwater field is a Greenfield offshore licence block in the eastern portion of the Niger Delta with water depths ranging from 1,200 to 2,400 metres.

Shell and Agip acquired the controversial OPL 245 from Malabu Oil and Gas in 2012 for $1.3 billion.

The acquisition has been the subject of a corruption probe and prosecutions in Italy and Nigeria but has not deterred Shell and Agip, which have both maintained their innocence, from going ahead with the field’s development.

Agip plans to achieve first oil in 2020 and is determined to start execution of the project in the first quarter of 2018.

THISDAY gathered that following the completion of the technical and commercial evaluation of the bids for the main packages in the development of the $13.5 billion Zabazaba deepwater oil field by the NCDMB and NAE, Saipem/Bluewater emerged as the winner of the $5.42 billion contract for chartering, operations and maintenance for a FPSO tanker facility for the Zabazaba and Etan development project.

The bid documents obtained exclusively by THISDAY at the weekend showed that of the three companies that submitted bids for the OPL 245 project, Saipem/Bluewater submitted the lowest bid of total lump sum of $5,426,500,714.00 out of which the bidder pledged to execute $2,966,993,161.91 of the work scope in Nigeria, in line with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010.