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Total and CNOOC to select Samsung for Egina FPSO

Samsung benefits from Nigeria local content regulation

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe 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%

 –NNPC 31%

The OML 130 block is located 150 kilometers offshore Nigeria and includes four fields, Akpo, Egina, Egina South and Preowei.

Total_CNOOC_NNPC_Egina_FPSO_Nigeria_OML130_MapTotal, CNOOC and NNPC delayed their decision by nearly one year because of Nigeria enforcement of its new regulation regarding the local content requirements.

This new regulation came into force project by project over the last years so that Total Akpo project had a local content of only 28% of the man hours for the construction of the FPSO.

In 2008, Total Usan project had reached 59% of local content in FPSO construction man hours.

For Egina, Total and its partners transferred in Nigeria the front end engineering and design (FEED) work to CresTech, a Technip local subsidiary.

Unfortunately Egina being bigger than previous FPSOs with 17,000 tonnes of topsides could not fit with any of the existing shipyards in Nigeria.

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.

Total_Nigeria_Samsung_FPSOThen Chinese contractors came in the game with Dalian Shipbuilding Industry Company (DSIC) teaming up in consortium with China Offshore Oil Engineering Corporation (COOEC) and Technip.

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.

In this context, Samsung takes the leap to invest in Nigeria to expand a shipyard close to Lagos in order to meet with Egina FPSO capacities.

From the FEED contract completed by CresTech (Technip) in 2010, the Egina FPSO should have a capacity of:

 – 200,000 b/d of crude oil

 – 160 million cubic feet per day(cf/d) of natural gas

The oil will be exported by shuttle tankers from the FPSO while the natural gas will be linked to Akpo FPSO 75 kilometers away before being transported to the shore by a common line.

In including the local content impact on the Egina FPSO project, the new Samsung offer is given to climb to $2.5 billion.

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.

For more information and data about oil and gas and petrochemical projects go to Project Smart Explorer


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