Chibisi Ohakah

An upstream oil and gas analyst with GlobalData, a leading data and analytics company, Cao Chai, has offered her view on the Bonga Southwest/Aparo deepwater project. This follows the news mid-February that Royal Dutch Shell and its partners are now set to commence the tendering process for the development of deepwater project offshore Nigeria.

The development of the Bonga South West/Aparo (BSWA) deepwater project, located in Oil Mining Lease (OML) 118 in the Niger Delta, is coming on the heels of the output of 200,000 barrels per day from Egina field operated by Total, which began production last month.

The BSWA deepwater project, which according to the Minister of State for Petroleum, Dr Ibe Kachikwu, will cost $10 billion with numerous value addition in-country, including job creation, skills acquisition and capacity development for Nigerians.

Cao Chai, a UK geophysicist, focused on economic valuations and insights of key exploration and development projects across the oil and gas sector, said the agreement between Shell Nigeria Exploration & Production Company (SNEPCo) and the Nigerian National Petroleum Corporation (NNPC) is a key step towards a final investment decision (FID) for BSWA.

She said it will open further opportunities in the deepwater oil and gas sector in Nigeria, whilst creating significant benefits for the state. BSWA, located in OML 118, OML 132 and OML 140, will be the first major deepwater project in Nigeria since Egina, which started development in 2013.

“The FID for BSWA was initially set for 2014; however, it has faced various delays due to the oil price crash in the same year, as well as the high costs associated with deepwater developments and a dispute over the key commercial terms of the related production sharing contract (PSC). BSWA has the potential to produce approximately 150,000 to 200,000 barrels of oil per day, which will account for around 10% of Nigerian crude oil production.

“BSWA fits in with Shell’s renewed focus on deepwater projects, with the company sanctioning a significant number of deepwater projects in Brazil and the Gulf of Mexico over past few years. Shell is also well established in Nigeria with the deepwater Bonga Complex already in production and a large portfolio of onshore assets, most of which were granted license renewals last year,” she said.

Last year, the Minister of State Petroleum had directed NNPC and SNEPCo to commence the tendering process for the execution of the project. She said in a statement that NNPC and its unit partners involved in BSWA development have reached agreement on the key commercial terms necessary to move the development forward.

“This agreement covers related production sharing contract interpretation disputes. It also sets an incentivizing and fair framework for developing this world class opportunity whilst opening further opportunities in the prolific Nigerian deepwater oil and gas industry.

“We look forward to realising the significant benefits to the Nigerian state, the Nigerian deepwater oil and gas construction contractors, their workforce and the investing parties as we progress towards the investment decision, construction and startup.

“Following the OML 118 Heads of Terms agreement, we are pleased to announce the release of the BSWA Invitation to Tender, where Nigerian and international companies on the agreed bid list are requested to bid for the various contract packages that make up engineering, the procurement and construction (EPC) of the BSWA project.

“This is an important step that will allow ourselves, the government and investing parties to understand the cost of the project and if within expectation, take the project’s final investment decision,” he said.

Last April, President Muhammadu Buhari met a delegation from Shell Plc, led by its chief executive officer Ben Van Beurden, in London, where a decision was reached that the oil giant and the NNPC would begin the implementation of projects that have been on the drawing board for several years. The project is expected to add 225,000 barrels per day of crude oil to Nigeria’s production

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