NNPC approach to oil contracts evaluation may cost Nigeria $48b investments

Emeka Ugwuanyi

07 December 2012, Nation, Lagos – Investments in the oil and gas industry worth about $48 billion could be lost following the bid procedure adopted by the Nigerian National Petroleum Corporation (NNPC).

The procedure has disregarded all due and standard processes in conducting bids for assets development in the industry.

The NNPC, it was learnt, has disregarded all stages usually undergone during bid periods meant to ensure transparency.

Under the present dispensation, the Corporation invites individual contractors directly to negotiate costs of contracts. Multinational oil companies have threatened to abandon some major projects, if the trend is not reversed.

A letter said to emanate from the Group Executive Director, Exploration and Production, Abiye Membere, to the multinational companies last month, showed that with the bid system, contracts, including supply, engineering fabrication and construction, and procurement, among others, which usually go through the National Petroleum Investment Management Services (NAPIMS) and others before getting to the Group Managing Director, have been collapsed into one and superintended by Membere.

In the letter, a source who spoke in confidence, said, Membere claimed that the new bid approach is meant to reduce cost of projects’ implementation.

The source said the multinationals frowned at the development because it doesn’t support the sanctity of agreement on contracts.

If the multinationals make good their threat, the ExxonMobil’s Erha North Phase 2 put at $5 billion, and Satellite fields Phase 2 also estimated at about $5 billion, Shells Bonga SW/NW estimated $8 billion, Total’s Egina field put at about $8 billion, Chevron’s Funiwa Gas Project estimated at $3 billion, Brass LNG estimated at between $12 million – $15 million and Nsiko project also put at about $4 billion, bringing the total projects threatened for abandonment to about $48 billion.

When our correspondent contacted, Membere, he only replied: “Who said that?”

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