This Day (Lagos)

Nigeria: NNPC - We Won't Bend Contracting Procedures for IOCs

The Nigerian National Petroleum Corporation (NNPC) yesterday said it would not compromise on its established processes of awarding contracts for major pending projects in Nigeria's oil and gas sector to the benefit of International Oil Companies (IOCs).

Apparently raising eyebrows over media reports credited to some IOCs which had accused it of deliberately stalling the execution of some multibillion dollar projects in the petroleum sector, the acting General Manager Public Affairs of NNPC, Mr. Fidel Pepple, said in a statement in Abuja that the corporation will only adhere to established procedures in its contracting cycle than been made to compromise.

Pepple stated that the corporation will not be intimidated to abandon its firmly established process of contract award because of what it termed calculated media blackmail ostensibly by the IOCs and other interested parties.

He said in the statement that while the industry concern is normally expected in the processes leading to the award of major oil and gas projects, the NNPC has an established procedure of contract and project approval which includes conduct of economic analysis to establish project viability as well as the Federal Government's interests from investments in the upstream.

Pepple explained that: "This procedure must be followed and IOCs cannot stampede the corporation into taking decisions that may be inimical to the nation because of their pecuniary interests."

Commenting on the claim that the NNPC has not held its periodic Group Executive Committee (GEC) meetings to discuss some major projects like the Total Egina deep offshore project and endorse same to its board for approval, Pepple said: "This claim is untrue as GEC meetings are being held weekly or fortnightly. However, Erha North Phase 2 and Egina project contracts have not been discussed yet at these meetings because NNPC management is critically reviewing the overall economics of the project in view of their high cost estimates in order to establish their validity, maximise Federal Government's take andensure comparative price competitiveness vis-a-vis benchmarks."

The corporation also defended its Group Executive Director, Exploration and Production (GED, E&P), Abiye Membere, who was alleged to be behind a phantom contract splitting attempt of the Egina project as he allegedly did with the previous Bonga South-west project, saying that such allegation was totally misplaced and untrue.

Pepple informed that the alleged contract splitting of Bonga South-west was never in the cards as there was never a time that Shell Nigeria Exploration and Production Company (SNEPCO) proposed three Floating Production Storage Production Offloading facility (FPSO) for Bonga field development.

"Membere also did not scuttle Bonga Southwest/Aparo Project six years ago. He was the GM, PSC Division of NAPIMS in 2006 and helped to move forward the strategy for a leased FPSO project for Bonga Southwest /Aparo project. He was deployed from this position to another position in NNPC's Engineering and Technical Directorate in 2007 during a routine management re-organisation exercise," he added.

NNPC noted that Bonga South/Aparo was recycled for concept re-evaluation in 2009 when dearth of bidders were recorded on the major packages at the technical stage and witha potential of only one bidder emerging to the commercial stage of the FPSO tender.

Pepple said: "This decision to recycle Bonga was taken by NAPIMS top management and not Engr. Membere"

Pepple also described as untrue the report that the NNPC had blamed lack of funding as the reason behind lull in the execution of the project.

He explained that: "This claim is untrue as there is no funding challenge in PSC because operators fund the investment 100 per cent."

He said that despite the spate of attacks, the NNPC remains focused on its core mandate of ensuring that the Federal Government and the Nigerian people derive maximum benefit from the proceeds of the nation's hydrocarbon resources.

Ads by Google

Copyright © 2012 This Day. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.