In a significant development for Nigeria’s oil and gas industry, Saipem, in partnership with two Nigerian firms, has secured a major offshore contract worth approximately $1 billion from Shell. This contract, which is part of Shell’s $5 billion Bonga North project, represents a major boost for both local and international companies involved in Nigeria’s deepwater oil operations.
The contract was awarded to Saipem as part of a consortium with KOA Oil & Gas and AVEON Offshore. Saipem’s share of the contract is valued at around $900 million. This partnership marks a key moment for Nigerian suppliers and subcontractors, who will be involved in local design and fabrication activities, contributing to the development of one of the most ambitious deepwater projects in the region.
The Bonga North project, located 130 kilometres offshore Nigeria, will focus on the Engineering, Procurement, Construction, and Installation (EPCI) of crucial subsea infrastructure. This includes risers, flowlines, subsea umbilicals, and other associated structures, which are essential for the project’s success. The contract has a major impact on the Nigerian economy, as it will create jobs and further the country’s oil and gas industry expertise.
Context of the Bonga North Project
Bonga North is part of Shell’s larger $5 billion offshore investment in Nigeria, aimed at expanding the country’s oil production capabilities. The Bonga field has been in operation since 2005, with Shell’s Floating Production, Storage and Offloading (FPSO) unit, known as Bonga Main, producing up to 225,000 barrels of oil per day. The unit achieved a major milestone in 2023, having produced its one-billionth barrel of crude oil.
The Bonga North project is a critical extension of Shell’s commitment to deepwater exploration and production in Nigeria. The project is expected to sustain oil and gas production at the Bonga facility, which will play a key role in ensuring steady cash generation for Shell in the coming years.
Shell has already made significant progress with the project, having made the Final Investment Decision (FID) to proceed with the Bonga North project last week. The project will involve the drilling and completion of 16 wells, with a mix of production wells and water injection wells, essential for maintaining reservoir pressure and enhancing oil recovery.
The Bonga North project’s expected peak production is 110,000 barrels of oil per day, which will contribute significantly to Shell’s overall production capacity. The first oil from the project is expected to be achieved by the end of this decade, making it a vital part of Shell’s long-term strategy in Nigeria.
TechnipFMC’s Role in the Project
In addition to Saipem’s involvement, TechnipFMC has also secured a substantial contract for the Bonga North project. The company will supply its Subsea 2.0 production systems, which include the design and manufacture of subsea tree systems, manifolds, jumpers, controls, and other subsea services.
Jonathan Landes, President of Subsea at TechnipFMC, highlighted Shell’s longstanding commitment to innovation and technology, stating, “Shell was the first to adopt our Subsea 2.0 configure-to-order solution, and continues to deploy it across multiple basins, underscoring its commitment to the technology globally.”
The award to TechnipFMC further cements its position as a leading player in the global subsea industry, particularly in deepwater projects. This contract will be included in TechnipFMC’s inbound orders for the first quarter of 2024, marking a strong start for the year.
Nigeria’s Strategic Role in Shell’s Operations
Shell’s strategic focus on near-field opportunities like Bonga North aligns with the company’s goal to maintain and enhance its upstream business performance. The Bonga North project is expected to generate over 300 million barrels of oil equivalent (boe), a significant resource volume that will support Shell’s long-term objectives.
SNEPCo, the Nigerian subsidiary of Shell, operates the Bonga field with a 55 percent stake. Other key partners in the project include Esso Exploration and Production Nigeria (20 percent), Nigerian Agip Exploration (12.5 percent), and TotalEnergies Exploration and Production Nigeria (12.5 percent). This joint venture structure ensures that the project remains a collaborative effort between both international and Nigerian stakeholders.
Zoë Yujnovich, Shell’s Integrated Gas and Upstream Director, spoke about the importance of the Bonga North project, stating, “This is another significant investment, which will help us to maintain stable liquids production from our advantaged upstream portfolio.”
The involvement of Nigerian companies in the project is a key step in supporting local capacity building, which is a priority for both Shell and the Nigerian government. By working with Nigerian firms like KOA Oil & Gas and AVEON Offshore, Shell ensures that the benefits of the project are felt locally, particularly in terms of job creation, expertise transfer, and the growth of Nigeria’s oil and gas sector.
