Total Upstream Nigeria Limited (TUPNI) said the budgeted cost for the Egina project since the final investment decision made in 2013 was not reviewed upwards.
Total Managing Director, Nichola Terraz disclosed this at the Senate Ad-Hoc Committee on Investigation of Local content Elements of the Egina Oil field and other related projects, on Tuesday in Abuja.
“Specifically, the initial budget established in 2013 for the Egina project was $16.354 billion and after extensive cost optimization by TUPNI and the project partners, this figure was revised downward to $15.751 billion in May 2013.
“The final investment decision was made on the basis of this reduced budget figure,” he said
Egina project is located in Oil Mining License (OML) 130 and is the largest oil and Gas Development currently on- going in Nigeria.
The Field is being developed by TUPNI in partnership with NNPC, CNOOC, SAPETRO and PETROBRAS.
The project was launched in 2013 and is expected to start production in the 4th quarter of 2018 and expected that it will add 200,000 barrels per day to the Nigeria’s oil production or approximately 10 per cent of the country’s total oil production.
Terraz said that the Egina FPSO would be arriving SHI-MCI yard in Lagos adding that it was a key milestone for the project and would be the first time FPSO would berth at quay side in Nigeria for lifting and integration of locally fabricated modules.
He assured that with the arrival of FPSO the project would be delivered as scheduled with the first oil expected by December this year.
According to him, the project will add 200,000 barrels of oil to Nigeria‘s oil production.
“Egina project has recorded many fists in the area of Nigeria content development being in the first project of the magnitude since the enactment of the NOGICD Act.
“Egina therefore is a symbol of confidence, commitment and faith in Nigeria by TUPNI and her partners,’’ he added.
Earlier, the Senate has called for a value-for-money audit of the 16.354 billion dollars Egina FPSO vessel contract, stating that unless the audit is conducted, it would no longer support other projects of such nature, such as the Bonga South-West and Zabazaba FPSO projects.
Chairman of the Senate Ad-Hoc Committee, Sen Adeola Solomon, said the audit became necessary to establish the actual cost of the projects and look at the implications of the project to the company.
He said the audit would focus on technical and financial aspects of the project.
“We are hereby directing the NNPC to conduct a value for money audit of the Egina project.
We are aware such would last for about 16 weeks. Until that audit is done, no other contracts of this nature would be supported by this Senate, either Bonga South-west or Zabazaba among others.
“We do not want the audit to be conducted by auditors of Total, but independent auditors to give us a clearer and true view of things,’’ he said
He further stated that the essence of its investigations was to guide the country in making decisions on similar projects in the future.
According to Adeola, this is because two similar projects scheduled to come up soon, Bonga South-West and Zabazaba, with a production capacity of 150,000 barrels per day, were budgeted at about $6 billion and $9 billion, respectively.
Also, Chief Operating Officer, Upstream of the NNPC, Rabiu Bello disclosed that so far, it had approved for disbursement, $10.7 billion of the total project cost, while he put the operating expenses of producing crude oil from the entire project at $10 per barrel.
Rabiu said the project which started in 1993 when the oil block was awarded and in 2013 when FPSO project contract was awarded, would hit first oil by December 2018.
He noted that Total, by the terms of the agreement, was expected to undertake the project, provide the finance, recover its cost and later share profit with the NNPC.