Shell lists challenges facing Bonga project

May 09, 2005 02:00 AM

Shell Nigeria Exploration and Production Company (SNEPCO) has said that the task of developing a pioneering deep offshore oil field in the country, was one of the key challenges facing the Bonga oil field.
SNEPCO has also awarded a $ 2.7 mm 30-day contract extension to Prosafe to provide accommodation services on the Bonga project. Development of the Bonga deep offshore field has created a running battle between the National Assembly and SNEPCO, following the escalating cost of the project from $ 2.9 bn to $ 3.816 bn, according to figures by the Senate.

However, in a presentation by SNEPCO's Gbola Sobande, the oil firms said it also had to contend with many challenges since the launch of the project in 1999.
"Since project sanction, there have been a number of challenges. These include a changed contracting world and the lack of track in the design of large multideck FPSOs," said Sobande. "Weather constraints in the Tyne River, the exit channel from the integration yard and the need to safeguard the integrated marine construction programme, led to significant carry over of Topsides integration work offshore," he added.

The changing environment with contractors' increasing loss of faith in lump sum Engineering, Procurement, Installation and Construction (EPCI), said Sobande, also posed a challenge.
"This is more so with the high risk large, complex and frontier developments like Bonga, for which there are only very few competent and experienced contractors who would be capable of managing these risks."

He added when the Bonga Project was launched, there had been very few deepwater projects the size and complexity of the Nigerian oil field, with industry experience limited.
"The cost variations that have resulted from the impacts of weight growth and the need for an integrated approach are two of the most significant commercial issues which had to be resolved before any meaningful progress to be made on the project, especially given the importance of schedule to maximise value,"he said.

The Senate Committee on Petroleum Resources (Upstream) had summoned SNEPCO last month to appear before the committee and explain how the exploration cost of the Bonga Field project which had a final investment decision of $ 2.9 bn, was overshot to $ 3.816 bn, with the first oil yet to be produced.
Production from Bonga, located in OPL 212, is expected to peak at 225,000 bpd, with first oil now project for July this year.

To meet the new schedule, Shell has gone ahead to award another 30-day contract extension to Prosafe to provide accommodation services on the delayed Bonga development off Nigeria. Prosafe's Safe Caledonia will continue providing dynamic positioning hook-up and construction support to the Bonga floating production, storage and offloading vessel.
The new extension will start on August 5, 2005.

Source: This Day
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