Saipem, two others in consideration for $5.42bn Zabazaba-Etan Devt Project in OPL 245
The bid documents obtained by Nigeria’s Oil and Gas has shown the valuations of three leading companies that are in for the $5.42 billion chartering, operations and maintenance contract for the Floating Production Storage Offloading (FPSO) tanker facility for the Zabazaba and Etan development project in Oil Prospecting License (OPL) 245.
Among the three, Saipem/Bluewater submitted the lowest bid of total lump sum of $5,426,500,714.00 out of which the bidder pledged to execute $2,966,993,161.91 of the work scope in Nigeria, in line with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act of 2010.
The bid documents also showed that Malaysia-based international offshore energy facilities and services provider, Bumi Armada submitted bid of a total lump sum of $7,622,412,019, out of which $2,740,108,326.84 is the price of work to be executed in Nigeria in line with the NOGICD Act.
The third bidder, Norway-listed BW Offshore, reputed as a leading global provider of floating production services to the oil and gas industry and the world’s second largest contractor with a fleet of 15 FPSOs, submitted a bid with total lump sum of $7,630,575,309, out of which $3,434,801,972.83 is the price of work to be domiciled in-country in accordance with the Nigerian content.
Though the NCDMB has only recommended the three contractors to Agip to select the winner of the contract following the completion of the technical and commercial evaluation of the bids for the main packages in the development of the $13.5 billion Zabazaba deepwater oil field, Nigeria’s Oil & Gas independently enquired from an industry source who confirmed that the project has not been signed off. There had been allegations that Saipem had won the contract based on been the lowest bidder out of the two other bidders.
Also, an official of Saipem, who opted to speak off the record, confirmed that Agip has not officially communicated any decision to award the Zabazaba and Etan project to Saipem, adding that all the bidders are still waiting for the official announcement of the winner.
He added that even if his company is the lowest bidder, it does not mean that it has automatically emerged the winner.
According to him, Subsea 7 was said to be the winner of Shell’s Bonga South Project three years ago, having submitted the lowest bid but the company did not win the contract at the end of the day.
“We have not been awarded the contract. We just submitted a bid and all the bidders are waiting for the results. Agip has not announced the winner and Agip has not given us any letter that we are the winner. You are the one telling me that we are the lowest bidder. But even if we are the lowest bidder, it is not automatic that we will win. About three years ago, everybody was saying that Subsea 7 was going to win the Bonga South West project because they submitted the lowest bid but they did not win the job at the end of the day,” he explained.
Confirming the above statement, the Executive Secretary of NCDMB, has stated that in line with “Section 16 of the NOGICD Act 2010, the award of the local content scope of the contract shall not be solely based on the principle of the lowest bidder where a Nigerian indigenous company has capacity to execute such job”, noting that “the company shall not be disqualified exclusively on the basis that it is not the lowest financial bidder, provided the value does not exceed the lowest bid price by 10 per cent.”
Nigerian Agip Exploration (NAE) Limited and Shell Nigeria Exploration and Production Company (SNEPCo) signed the production sharing agreement at the ratio of 50:50 for the development of Zabazaba and Etan, where NAE is the operator. NAE is developing Zabazaba field which has proven reserves of 560 million barrels of oil, as a standalone development, while Etan field, which is also in OPL 245, will be developed as a tie-back to Zabazaba.
The Zabazaba Deepwater field is a Greenfield offshore license block i.n the eastern portion of the Niger Delta with water depths ranging from 1,200 to 2,400 metres. Shell and Agip acquired the controversial OPL 245 from Malabu Oil and Gas in 2012 for $1.3 billion.
The acquisition has been the subject of a corruption probe and prosecutions in Italy and Nigeria but has not deterred Shell and Agip, which have both maintained their innocence, from going ahead with the field’s development. Agip plans to achieve first oil in 2020 and is determined to start execution of the project in the first quarter of 2018.