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Explain why Egina FPSO is more expensive than others worldwide, Senate tells Total

A fresh twist is engulfing the recently completed $16bn Egina floating, production, storage and offloading (FPSO) by Total Upstream Nigeria Limited.

In a memo obtained by Business Hilights Abuja Bureau chief, the Senate Committee on Local Content is seeking to know why “the Nigerian Egina Project is more expensive than any other elsewhere in the world, in addition to its local component”.

Currently, the platform has been completed at the Samsung Heavy Industries Ship Building Yard in Korea and is on its way back to Nigeria.

Besides, the Committee is asking Total Upstream Nigeria Limited, the core investors in the scheme to provide it with details of the local content in project.

Delivery specifications of the platform show that the project includes drilling and completion of 44 oil wells and other ancillary facilities in deep sea, is expected to create 50,000 employment opportunities for Nigerians and aid acquisition of highly technical skills.

The Chairman of the committee, Senator Solomon Adeola, directed Total to furnish the panel with its level of implementation of the Nigerian Local Content Act, 2010 on the project.

However, Total had made it clear that several local content jobs on the platform will be completed on arrival which is expected on or before the end of the year.

First of all, on arrival from Korea, the Egina FPSO will berth at LADOL in Lagos where other key fabrication and full integration works will be done before it leaves for the high sea for operations which is expected to start from the first quarter of 2018.

Oil and gas industry analysts say the platform will raise Nigeria’s production output by a reasonable percentage.

The Committee chairman asked for the details during the appearance of the Managing Director and Chief Executive Officer of Total Upstream Nigeria Limited, Mr. Nicolas Terraz, before the committee in respect to the project.

Other members of the committee present at the presentation were Senators Biodun Olujimi, Kabiru Marafa, Tayo Alasoadura, Aliyu Sabi-Abdullahi, Binta Garba, Bassey Akpan, Andrew Uchendu and Dino Melaye.

While commending Total for its achievements on the project, Adeola insisted that more detailed information on its implementation of the Nigerian Local Content Act, 2010 would be required, “given the quantum increase in the project sum since it was awarded in March 2012.”

He averred that “In the last four years alone, the project value that was initially awarded at the sum of $3,143,499,498 to Samsung Hyundai Heavy Industries in 2012 has been varied from $6bn to $13bn and $16bn without commensurate increase in the local content portion of the project. The committee will want to have information on this aspect of the project in the interest of the Nigerian people”.

The Committee also gave an indication of extending the invitation to other contractors involved in the project including Saipem, Nestoil, Dorman Long, Nigerdock and Aveon Offshore.