Samsung benefits from Nigeria local content regulation
The french major Total and its partners, China National Offshore Oil Corporation (CNOOC) and Nigeria National Petroleum Company (NNPC), are in the process to approve Samsung Heavy Industries (Samsung) offer for Egina new-build floating production storage and offloading (FPSO) vessel.
Egina project is part of the development of the OML 130 block where Total and its partners share the working interests as following:
– Total 24% is the operator
– CNOOC 45%
The OML 130 block is located 150 kilometers offshore Nigeria and includes four fields, Akpo, Egina, Egina South and Preowei.
Samsung to build shipyard close to Lagos in Nigeria
All the quotations submitted by the contractors in competition for the engineering, procurement and construction (EPC) contract were skipping the local content regulation requirements.
At that time Hyundai Heavy Industries was leading the race ahead of the other South Korean companies Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung because of its previous references with Akpo and Usan.
With COOEC belonging to CNOOC, the largest stakeholder of Egina project, this Chinese-French team could have been very competitive on this $2 billion FPSO until the local content requirements came into the picture.
From contractors investigations, the capital expenditure needed to upgrade the existing shipyard in Nigeria to fit with Egina FPSO oversize is estimated to $500 million.
In addition to this significant amount there is no clear perspective for the contractors to build a similar FPSO in Nigeria on the foreseeable future.
Anyway the Nigerian Federal Government sticks on its local content regulation leading Total and its partners to call the different bidders to correct their respective offer accordingly.
– 200,000 b/d of crude oil
– 160 million cubic feet per day(cf/d) of natural gas
Initially planned to start operations in 2015, the local content requirement has also consequences on the schedule on the program as Total and its partners, CNOOC and NNPC, are now targeting Egina FPSO to come on stream in 2016.