Egina FPSO: A Nigerian Content Measurable Achievement
By Godspower Ike,
Total has blazed the trail with the Egina FPSO project and has recorded many firsts in the Nigerian petroleum industry. This article highlights the milestones of the Egina project, especially with the recent sail-in of the FPSO into the country, especially in the area of Nigerian Content.
The Egina project, especially with the successful sail-in of the Floating Production Storage and Offloading (FPSO) unit has proven that the Nigerian petroleum industry is capable of rising above its challenges and given the right environmental circumstances, the industry would become a force to be reckoned with in the global energy landscape. The Egina project is testimony to the fact that large deepwater projects can be developed with a very high level of in-country activities. The project was also embarked upon at a time of immense uncertainties in the operating, fiscal and regulatory environment of the Nigerian petroleum industry, thereby, positioning Egina as a symbol of confidence, commitment and faith in Nigeria by Total Upstream Nigeria Limited (TUPNI) and her partners.
TUPNI, a subsidiary of French multinational Total SA, and her partners took delivery of the Egina FPSO in January 2018, from South Korea. At 330 meters long, it is the largest FPSO ever installed in Nigeria, and currently berthed at the newly built 500-metre FPSO integration quayside at the SHI-MCI Yard, LADOL Island, Lagos. Six Topside modules of the gigantic FPSO were fabricated in-country and are presently being integrated at the LADOL yard in Lagos. The milestones achieved in the Egina project were firsts for Nigeria, and in fact, for Africa. The integration of the six locally fabricated topside modules at the SHI-MCI Yard before its final sail-away to the Egina field is said to be a game changer as far as the execution of deep offshore oil and gas projects in the country is concerned.
In general, the Egina field was discovered by Total in 2003 within the Oil Mining License 130 (OML130), 150 kilometres off the coast of the Niger Delta in Nigeria The field is being developed by Total in partnership with NNPC, CNOOC, SAPETRO and PETROBRAS. It is projected to add 200,000 barrels per day to Nigeria’s oil production, approximately 10 per cent of the country’s total oil production. Egina is the largest investment project currently on-going in the oil and gas sector in Nigeria. The overall progress of the project stands at 93percent per cent. Total said the project is expected to be completed in the fourth quarter of 2018, within the initial budget of $16 billion.
The Egina oil field, located 150 kilometers off the coast of Nigeria at water depths of 1400 – 1700 meters, is one of Nigeria’s most ambitious ultra-deep offshore projects. Total and its partners began the drilling program on the Egina field in December 2014. The field would be connected using umbilicals and risers to the FPSO which is designed to hold 2.3 million barrels of oil. It is also expected that 24 million man-hours would be worked locally, corresponding to 77 per cent of the total hours planned for the project. The project also saw some 60,000 tons or 35 per cent of equipment produced locally, with infrastructure developed and built in the country, including the 500 meters long quay that would assemble and integrate the in-country built modules onto the FPSO, which would afterwards be available for other industrial projects.
Other key Nigerian Content features of the project include over 560,000 man-hours of human capacity development across Egina contracts; construction of several large-scale new fabrication facilities in Nigeria and upgrade of several existing fabrication yards. Being the first major deepwater development project launched after the enactment of the Nigerian Oil & Gas Industry Content Development (NOGICD) Act of 2010, Egina has the highest level of local content of any such project in Nigeria. The project also has the highest number of FPSO topside modules (six) to be fully fabricated and integrated in Nigeria; while the assembly of the Integrated Control and Safety System of the FPSO was fully performed in Nigeria. Egina includes the fabrication of the largest subsea equipment, manifolds, and risers, ever completed in Nigeria, far above what was achieved in previous projects.
Basic Engineering for the Egina Project was performed in Lagos by three Nigerian Companies NETCO/Batelitwin, CRESTECH and Dover, representing 94 per cent of the total man-hours spent on basic engineering. Total’s Egina Project Management team (PMT) and all the main contractors’ offices are based in Nigeria, a first for a Nigerian FPSO project. Locating these teams in Lagos to carry out project management, engineering and procurement activities had resulted in generating significant employment opportunities for Nigerians at various skill levels, ranging from top level engineers and managers to office administrative staff. Detailed Engineering for the Egina FPSO topsides was executed in Nigeria by Samsung with a consortium of Nigerian engineering companies, such as NETCO, Delta Afrik and International Energy Services Limited (IESL), all based in Lagos, which at the peak employed about 250 Nigerian engineers.
In addition, the unprecedented record level of Nigerian Content on all the packages of the Egina project had translated into increased work scopes for several fabrication yards at various locations in Nigeria, in some cases calling for significant facility development and capacity expansion investments by the project. Specifically, as a result of the project, a number of yards were either built or upgraded to support fabrication and integration works of the various components of the Egina project, such as SHl-MCI Yard in Lagos Deep Offshore Logistics Base (LADOL), Lagos – a new fabrication and integration yard. Also, Aveon Yard, Port Harcourt was upgraded and the construction of new facilities was completed under the Subsea Production Systems (SPS) package contract..
FMC Technology’s Base at Onne was upgraded under the SPS package contract. Also Saipem Yard in Port Harcourt became the first Quad-Joint plant in Nigeria enabled to weld four pipe joints together in order to gain efficiency and productivity during the offshore installation phase. Gil Automation Facility, Lagos, was upgraded for the Integrated Control & Safety Systems (ICSS) Panel assembly under the lCSS Package contract.
In addition, coating of the 75 kilometres of oil production, water injection and gas line pipes for the Egina project was fully executed within Nigeria by Pipe Coaters Nigeria Limited (PCNL), while the paint used for the coating of the FPSO was locally made. Highlighting the Nigerian Content milestones of the project, Aveon Offshore Limited successfully completed the fabrication of six Foundation Support Structures and loaded out these components in respect of the Egina SPS project. Aveon also delivered some of the project scope including 16 Umbilical Termination Boxes and subsea tree fabrications (Frames, Permanent Guide Base and Gasmats) between 2015 and 2016. The company also fabricated six Subsea Manifolds together with five Subsea Distribution Modules and 32 multibore production well jumpers.
Aveon Offshore Limited, a fully Nigerian owned engineering and fabrication services company was awarded the contract by FMC Technologies for the fabrication and loadout of approximately 5,000 tons of subsea structures including six manifolds with associated Suction piles, various subsea tree frame elements, jumpers and control systems for the Total Upstream Nigeria Limited (TUPNI) Egina Project in 2013. The project was executed by Aveon Offshore at its 300,000 square meters fabrication yard in Rumuolumeni near Port Harcourt.
In order to accommodate the workload generated by the project, FMC Technologies and Total made capital expenditure (CAPEX) investment by upgrading Aveon’s site in Rumuolumeni. As a result, a dedicated Carbon Steel workshop, Duplex welding facilities and Painting workshops of over 8,000 square meter, electrical power and distribution and more were added to the yard’s existing infrastructure and existing premises such as Quayside were completely reinforced. The project has generated more than three million productive man hours in the last three years. Energy Work Technology Limited (EWT), a subsidiary of the Obijackson Group, fabricated nine Oil Loading Terminal buoy anchor mooring piles for the Egina project and it also participated in the Egina FPSO scope and fabricated 11 pressure vessels for the FPSO topside and hull compartments through a subcontract from Samsung Heavy Industries Nigeria.
On the part of LADOL, its Managing Director, Ms Amy Jadesimi said, “The arrival of the Egina FPSO is a sea change – no pun intended – because it shows that we can now carry out the most challenging industrial project in the world, in Nigeria. This is not just about the arrival of the FPSO Unit; it is about the building of the yard and the operation of the yard. Nigerians who worked in the yard operated above the average global standard and the results speak for themselves. “The fact that the FPSO was sent here was primarily because we achieved everything that we needed to achieve in the yard. The six modules were built; we were ready to receive the unit ahead of time. And in every way, the arrival of the FPSO and the way the project has been conducted in Nigeria exceeded expectations. “The collaboration and the proof that ease of doing business is working, is also an important milestone. We couldn’t have achieved this without the support of the Nigeria Port Authority (NPA).
“The NPA went the extra mile – they set up a committee, they coordinated all the stakeholders (both private and public sector). They made sure that the shipping channel was upgraded, brought in extra equipment, and brought in extra tugs.”
The Managing Director, Total Upstream Nigeria, Mr. Nicolas Terraz, had explained that the FPSO had been designed for 25 years of operations and in addition to producing 200,000 barrels of oil per day at plateau, the operations will generate significant activities for local contractors in various sectors and continue to provide avenues for the training and development of Nigerians in various domains. “Being the first project to be launched after the enactment of the Nigerian Oil and Gas Industry Content Development Act in 2010, Egina is advancing Nigerian content to record levels and has by far the highest quantum of local content completed for any oil and gas project in Nigeria, but also for Total’s projects worldwide,” he said.
In response to controversies surrounding the cost of the project, Terraz, maintained that there had been no upward review of the budgeted costs for the Egina Project since the Final Investment Decision was made in 2013, adding that rather, concerted efforts were made to deliver the project within the budget and even below it. He said, “Specifically, as we have earlier stated, the initial budget established in 2013 for the Egina Project was $16.354 billion and after extensive cost optimization by TUPNI and the project partners, this figure was revised downwards to $15.75 billion in May 2013 and the Final Investment Decision was made on the basis of this reduced budget figure.
“In this respect, it is the highest priority for TUPNI as operator to control the cost of the project during the execution phase and to deliver the project within budget.”
Supporting this view, Chief Operating Officer, Upstream of the NNPC, Mr. Bello Rabiu, also stated that out of the $16 billion budgeted for the Egina project which started in 2013, $10.7 billion had been disbursed so far. Bello stated that at the initial phase, it was agreed that the project would cost $16.35 billion, adding that the cost element of the contract had not changed and still remained $16 billion now that the project is almost completed.
Rabiu said the project, which started in 1993 when the oil block was awarded and in 2013 when FPSO project contract was awarded, would hit first oil by December 2018, while he noted that Total, by the terms of the agreement, was expected to undertake the project, provide the finance, recover its cost and later share profit with the NNPC. Speaking in the same vein, Executive Secretary of the Nigerian Content Development Monitoring Board, Mr. Simbi Wabote, commended Total for the milestones achieved in the project, especially for its strict compliance to the local content initiatives.
Wabote declared that Egina is the first FPSO project agreement to be signed and undertaken after the Nigerian Oil and Gas Industry Content Development, NOGICD, Act was instituted in 2010. Intrinsically, the arrival of the Egina FPSO at the LADOL Free Zone in Lagos since January 24 has further brought the Nigerian Content Policy (NCP) to a practical reality. The active participation of the indigenous firms and other local service providers in the project execution has so far delivered the benefits of the Nigerian Local Content Policy in measurable terms and scales. And from available indices, the country’s NCP can be adjudged to be making impressive progress in having its targets met. Considering the degree of local content implementation on this project, it has been described by industry players as a game changer as far as deep offshore oil and gas project execution in the country is concerned. It was in this vein that members of the Senate Committees on Gas and Petroleum (Upstream) commended Total and its partners for the remarkable progress made towards the completion of the Egina FPSO unit. Senator Omotayo Alasoadura, who is chair of the Senate Committee on Petroleum Resources and his Gas Committee counterpart, Senator Barnabas Gemade, led their respective committees on an inspection tour of the 330 metres-long Egina FPSO and expressed delight with the pace of work on the unit and its massive Nigerian content profile.
“Seeing the Egina FPSO has shown that a good investment has been made to ensure that Nigeria moves deeper and deeper into the sea to exploit its God-given endowment of oil,” stated Alasoadura. “I believe that with Egina going operational very soon, Nigeria will be able to meet its quota not only to OPEC but also will have enough to meet its other commitments. I believe that it is a good project and Total has done a great thing bringing such an FPSO to Nigeria, making it first in Africa. This milestone has brought us to where we should be as the giant of Africa,” he added. On the local content work being done on the project, Senator Alasoadura said: “It is massive development of capacity. You cannot do much for local development without building capacity and that has been done by giving Nigerians the opportunity to build part of what we are seeing here today. I am sure the next time it will take less money and time to build something similar because of developed capacity.”
In his own remarks, Senator Gemade who led the Senate committee on Gas said, “We are very excited about the participation of Nigerians that are technically qualified in major and huge projects like Egina. This impact cannot just be swept under the carpet. Those responsible for actualising this project must be commended.” Other senators on the visit were Senators Gershom Bassey, Magnus Abe, Samuel Egwu, Peter Nwaoboshi, Benjamin Uwajumogu, Baba Garbai, Ogola Foster and Ibrahim Kurfi. In his response, Managing Director of Total Upstream Companies in Nigeria, Mr Nicolas Terraz, thanked the senators for taking the time to visit the Egina FPSO saying, “What you are seeing here is a product of the hard work of our staff, many of whom are Nigerians, along with our very supportive partners and Nigerian authorities.” As a result of the successes and milestones recorded in the Egina project thus far, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, had in 2017, hinted that the Federal Government was considering setting a deadline for local fabrication of Floating, Production, Storage, Offloading, FPSO in Nigeria.
Kachikwu noted that Nigeria would soon set a benchmark and deadline for vessels operating in the country, ensuring that a certain percentage of the vessels are fabricated in Nigeria. He said, “Specifically, in areas dealing with vessel fabrication and offshore platforms, such as FPSO, we must set a benchmark for when we can exit. No country in the world has been able to achieve this by just sitting around and giving contracts. We must be able to see that in 10 years’ time all FPSO in Nigeria would be localized. We must begin to drive that.”
Furthermore, in February 2018, Kachikwu said the Federal Government had also set a target that over the next 10 years, Nigeria would produce an FPSO. Confirming this, Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr. Simbi Wabote, also set an eight-year timeline for stakeholders in the petroleum industry to strive to develop local capacities to execute full fabrication and integration of FPSO vessels in-country. Wabote who stated this during the inspection of the Egina FPSO in Lagos in February, commended Total E&P for setting high Nigerian Content benchmarks with the Egina project, in engineering, fabrication, testing, coating and integration, stressing that the challenge for forthcoming projects would be how to raise the bar. He said, “Our aim is to stretch the limit to get more for Nigeria. Our aspiration is that come the next seven to eight years, full integration of an FPSO must happen in Nigeria. Already the Board and major operating companies are working towards full domiciliation of FPSOs.”
The NCDMB boss also affirmed that the Egina project has changed the narrative about the capacities and capabilities of oil servicing companies in Nigeria.
According to him, the project simply raised the bar in local participation in various scopes covering the wells, subsea production systems, umbilicals, flowlines and risers, FPSO topsides, and offloading buoy. He said, “One of the Nigerian contractors that fabricated the Buoy completed it three months ahead of schedule. The argument often put forward by project promoters is that Nigerian Content is expensive and cannot deliver on schedule. Egina has buried that mindset forever.” He also underscored the need for new projects to sustain the achievements and employments that were created on the Egina project.
However, commenting on the company’s plans for the future after the Egina project, Terraz, the Total boss said, “Everybody is asking me this same question. What I tell them is that first, we are not finished with Egina. We still have lots of work to do in Lagos. We have some module lifting, some integration, then we have to bring the FPSO to the field, do the connection (hook-up campaign), start up; all these before the end of year. I can tell you, 2018 for us is a very busy year. My first objective today is to deliver first oil from Egina by the end of 2018. “Now, we are also, of course, working on future projects. We are also studying what future projects would be, particularly, on the side of the joint venture with the NNPC. Today, we are working to generate incremental production. We have two drilling rigs working at the moment.
“We are preparing the next project, which is Ikike. It is not as big as Egina, but it would bring 32,000 barrels per day production, plus quite a lot of gas, 3.5 million cubic metre per day of gas. In this project now, we are working with the NNPC and with the Nigerian Content Development Monitoring Board, NCDMB, to be able to take Final Investment Decision, FID, before the end of the year.” Terraz also noted that the company is already working on the projects that would be launched this year, as well as those that would be launched in two, three and four years. He said, “On this for instance, we have a project we know would come after Egina, in the deepwater. We still have two to three years of studies before launching the project. The idea is that this project that would be the one that would come on when Egina starts declining.
“It would come and maintain the production plateau which would help us better utilise the FPSO of Egina and do everything that we have talked before, like decreasing cost among others. We also have two exploration wells planned for this year. It is a Joint Venture. Total will continue to prepare for the future.”
The many milestones of the Egina project would continue to reverberate across the Nigerian, African and global petroleum landscape in the years to come and would serve as a benchmark for future projects, and would also showcase the enormous potentials of the Nigerian petroleum industry.