Saipem, working alongside two Nigerian companies, has landed a major contract with Shell for a deepwater oil and gas project off Nigeria’s coast. The deal, valued at approximately $1 billion, involves Engineering, Procurement, Construction, and Installation (EPCI) work for the Bonga North Project. Saipem’s share of the contract is about $900 million.
The project will see Saipem handling risers, flowlines, subsea umbilicals, and other structures. Key activities like design and fabrication will involve local suppliers and contractors, boosting Nigeria’s oil and gas infrastructure.
Bonga North Project Overview
Located 130 kilometres offshore in the Gulf of Guinea, the Bonga North Project will be connected to Shell’s Floating Production, Storage, and Offloading (FPSO) unit, Bonga Main. This FPSO has been operational since 2005 and reached a milestone of producing its one-billionth barrel of crude oil in 2023.
Shell plans to drill, complete, and start up 16 wells as part of this project, with half dedicated to production and the rest to water injection. The project also includes upgrades to the existing FPSO and the installation of new subsea equipment. Bonga North is estimated to have recoverable resources exceeding 300 million barrels of oil equivalent (boe) and could produce up to 110,000 barrels of oil per day when it reaches peak production.
Key Collaborators
In addition to Saipem, TechnipFMC will provide advanced Subsea 2.0 production systems for the project, including subsea tree systems and manifolds. Jonathan Landes, President of Subsea at TechnipFMC, highlighted the significance of Shell’s commitment to this cutting-edge technology and its potential to open further deepwater opportunities in the region.
Economic and Strategic Importance
Shell’s investment in Bonga North reflects its strategy to focus on deepwater and gas operations in Nigeria. With an Internal Rate of Return (IRR) above the company’s target, the project will sustain production at the Bonga facility for years to come. Shell has also been restructuring its Nigerian operations, including divesting its onshore joint venture in early 2024 to focus on offshore and gas ventures.
Partners in the Bonga North Project include SNEPCo (55%), Esso Exploration and Production Nigeria (20%), Nigerian Agip Exploration (12.5%), and TotalEnergies Exploration and Production Nigeria (12.5%). The Nigerian National Petroleum Company Limited (NNPC) represents the interests of the Nigerian government.
Looking Ahead
With first oil expected before the decade’s end, the Bonga North Project is set to reinforce Nigeria’s position as a key player in global oil production. It also aligns with Shell’s goal to maximise returns from its upstream portfolio while contributing to local economic growth.