Nigeria to start rehabilitation of oil joint venture facilities

Mar 03, 2005 01:00 AM

The Nigerian Government will soon start rehabilitation of the nation's upstream exploration and production joint venture facilities.
A top official of Nigeria National Petroleum Corporation (NNPC) told that the facility upgrade which is estimated to gulp billions of naira had become imperative given their ages and trail state. He said the facilities in the joint ventures operated mainly by foreign oil companies were about the oldest industry equipment in the world. According to him the upgrade will cut across all the joint ventures in the onshore and conventional offshore locations beginning with the Bonny Terminal in Rivers State.

The terminal dominated by the nation's biggest joint venture operated by Shell Petroleum Development Company (SPDC) Nigeria is said to be over 40 years without maintenance overhaul, 15 years older than its original lifespan of 25 years. Facilities at the terminal may soon collapse if urgent upgrading is not carried out.
Other terminals in the nation include the Forcados which is also dominated by Shell, Qua Ibo Terminal in Akwa Ibom State which forms the operational hub of Mobil Producing Nigeria (MPN), and the Escravos Terminal in Delta State, amongst others.

The NNPC chief said the terminals along with other production facilities in the various operated joint ventures had depreciated due to long period of non maintenance. He blamed the situation on the inability NNPC to master enough funds to meet its joint venture obligations with the companies due to poor funding from the federal government.
NNPC holds 60 % interest in all the joint ventures on behalf of Nigeria except in the NNPC/Shell/Elf/Agip joint venture where it holds 55 %, having divested 5 %. Under joint venture agreements, all panties to the business contribute proportionate operational funds to the operator who manages the venture from where investing parties draw their yield shares.

NNPC, contributes the biggest funds through the infamous cash calls described by the government of doing too extravagant and activised by the National Assembly as being dogged with leakages. But the NNPC top shot said cuts in cash calls had made it difficult for the corporation to provide enough funds proportionate to its 60 % interests to fund equipment upgrade in the joint ventures.
He did not however explain whether the cuts in the joint venture cash call budget in recent developments was responsible for the said age-long neglect of the facilities. The joint venture interest of the corporation, he said, would require about $ 5 bn or N 670 bn annually to service.

He lamented that the recent approval granted the corporation was in the neighbourhood of N 5 bn or N 536 bn and inadequate to meet its joint venture maintenance obligations. The source noted, however, that joint venture partners would press on with the facility upgrade with limited funds, adding that care would be taken to ensure there would be no disruption in production.
Joint venture facilities include 10,000 km of pipeline on land, 112 flow stations, 126 production platforms and 13 export terminals. There are other facilities in the deep offshore facilities governed by production sharing contracts (PSC) including Bonga, Ngolo, Abo, Agbani, Erha, Akpo and Usan. Most of the PSC facilities are relatively new and directly under the maintenance purview of the operators.

Source: Daily Champion
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