How Sylva, Kyari’s Patriotic Intervention Assisted Indigenous Firms To Secure Shell’s Contract

Succour seems to have come the way of indigenous companies and local contractors in the oil and gas industry that felt precluded from participating in the HA field development of Shell Petroleum Development Company of Nigeria Limited with the intervention of the Federal Government.

Indigenous companies and local contractors had lamented the contracting guidelines posted by Shell Petroleum Development Company of Nigeria Limited for the pre-FEED and FEED of the HA field development project, alleging that it was designed to preclude them from effective participation.

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Many players in the local oil & gas industry in Nigeria, had lamented that the initial Shell Petroleum Development Company HA field tender bid was clearly disadvantageously tilted against local content given that the listed requirements for development of the HA field was obviously unachievable by local contractors.

The base concept for the HA field is the development of three gas wells and six oil wells.

While the gas well is targeting three reservoirs, the target of the oil wells is one oil rim and three oil bearing reservoirs.

The surface development concept that was considered for the project consists of a main Processing Platform, located in HA field in 17m of water depth, with capacity for 250 million standard cubit feet per day, 40,000 barrels of oil per day gross liquids and 30,000 barrels peak oil of condensate rates.

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But a memo made available to local contractors for the $1.6bn HA field development had stipulated that prospective contractors must have executed construction contract involving similar scope with a value of at least $900m.

Based on the requirement set for the execution of the project, Shell had stated that the contractors must “provide experience in the last five years in the management of minimum of two multi-disciplinary construction contract involving a similar executed scope (15m – 200m offshore water depth) carried out in the Niger Delta or similar environment, with a value of $900m.”

The requirements added that “This shall entail details of actual project value, clients and reference contracts.”

Some local contractors had lamented that the requirement by Shell for “Confirmation letter from all financial institutions that have provided short term financing to the supplier up to $900m and details of existing third-party loans or guarantees (if any).” was too stringent for them to meet.

One of the local contractors had said that there are no Nigerian financial institutions capable of providing such financial facility at the moment and stipulating such terms.

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However, worried by this development, it was gathered that the trio of the Minister of Petroleum, Timipre Sylva; the Group Managing Director of the NNPC, Mele Kyari and Chief Operating Officer, NNPC Upstream, Tombomieye Adokiye recently intervened in turning the tide in favour of local indigenous companies.

Their intervention was by way of extracting and reserving the FSO, production platform and water transfer line scope of the HA Project for the Nigeria Engineering Technical Company, NETCO led consortium.

THE WHISTLER gathered on Wednesday that this intervention is a glaring show of patriotic commitment and support for the growth of local indigenous companies and contractors operating in the Nigerian oil and gas industry.

A top government official confided in this Website that this singular move by the trio has bolstered the potential to further develop and entrench local capacity development.

The source said the move would assist greatly in growing the Nigerian local economy in line with the proposed new Petroleum Industry Bill.

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