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Players hone their bids for Shell’s Bonga prize

Samsung, Saipem-COOEC and CIMC-Monobuoy among those set to submit offers for Nigeria project

The competition to supply Shell with a floating production, storage and offloading vessel for its challenging $10 billion Bonga South West-Aparo (BSWA) project off Nigeria is hotting up with technical and commercial bids due to be submitted next week.

Industry sources said three groups are finalising prices and local content strategies and — notwithstanding a late contract extension — were due to file their proposals to the Anglo-Dutch giant on 11 September.

One strong contender is South Korea’s Samsung Heavy Industries, with a base-case plan expected to involve using the SHI-MCI yard in Lagos.

Samsung used this facility to integrate the topsides and FPSO hull for Total’s recent Egina project off Nigeria.

Another competitor is a consortium of Italy’s Saipem with China’s Offshore Oil Engineering Company (COOEC).

COOEC is expected to build the topsides and outsource hull fabrication to other yards in China, with Saipem set to handle the project’s local content aspect if this consortium wins the contest.

A third group believed to be preparing to submit bids is China’s CIMC Raffles and Monobuoy, a Lagos-based engineering concern with a US parent company.

It is understood that CIMC will build the hull under this proposal, with VME building the topsides — it has yards in the US and Indonesia — and India's Kavin handling engineering.

It is understood that the pipeline bureau owned by China National Petroleum Corporation has tied up with Cosco Shipping Heavy Industry for the latter to build the hull of the FPSO.

However, it is unclear if the pipeline bureau plans to bid for the FPSO independently because some sources suggest it may be trying to join the Saipem-COOEC consortium.

Technical and commercial bids for the 150,000 barrels per day FPSO were originally set to be submitted in June, before the schedule was pushed back to late July and then to mid-September.

One of the issues to address for all three rivals has been how to meet the country's local content obligations.

Speaking at an industry event in Lagos two months ago, Shell Nigeria E&P Company (SNEPCO) managing director Bayo Olujari warned: “Projects should be competitive, and if they are expensive due to different local conditions, it will be difficult to attract investments in Nigeria.”

One well-placed project watcher said last month that the bidders were finding it difficult to accurately calculate a fixed, lump-sum price — as required — because of a lack of clarity on certain technical and local content requirements.

Samsung’s ability to use the SHI-MCI yard gives it an ostensible advantage in the BSWA contract battle because the remaining bidders will likely have to invest significant funds to upgrade other facilities to match local content targets.

The local content targets currently stand at 27% in terms of a project’s overall value goals, but the government wants this to more than double within eight years.

Two weeks ago, Simbi Wabote, executive secretary of the Nigerian Content Development & Monitoring Board (NCDMB) set out the organisation’s goals, including 70% Nigerian content by 2027.

By this time, he believes NCDMB can help create 300,000 jobs and keep in-country some $14 billion of the industry’s annual spending of $20 billion.

One of the board’s initiatives is the Nigerian Oil & Gas Park Scheme (Nogaps) with construction work starting on two sites — Odukpani in Cross River State and Emeyal 1 in Ogbia, Bayelsa State.

Wabote also outlined how the board has sub-contracted companies to help carry out specialised monitoring and compliance functions in the upstream sector and has charged accounting firms to carry out forensic audit of Nigerian Content Development Fund remittances. Wabote also suggested that the Notore Chemical Industries complex at Eleme in Rivers State could be further developed to carry out “execution” work for the BSWA project, but did not elaborate.

Meanwhile, McDermott, Saipem, Subsea 7 and TechnipFMC are among those chasing an engineering, procurement, construction, transport and installation order worth upwards of $1 billion for the project’s pipelines, flowlines and risers.

BSWA’s umbilicals, single-point mooring system and 20-well subsea production system are subject to separate bid processes, with TechnipFMC, GE-controlled Baker Hughes and OneSubsea thought to be chasing the latter.

Shell is thought to be targeting a final investment decision on BSWA next year, with first oil flowing in 2023 or 2024.

However, speaking to Upstream recently, multiple sources questioned if this schedule is achievable, partly because of the local content issues but also given yet-to-be-resolved talks over an extension to the BSWA production sharing contract and new PSC terms.

The PSC talks could be wrapped up this month but SNEPCO’s Olujari said in July: “If the discussions go the wrong way, BSWA... will be frozen for some time.”

The 800 million-barrel BSWA field straddles the Shell-controlled OML 118 block and Chevron-operated OMLs 132 and 140, where the structure is known as Aparo.

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