Shell sets a course for Bonga South West FPSO tender

Contractors chasing prized deal to supply unit for revamped deep-water project off Nigeria.

Supermajor Shell will receive responses within days from contractors set to battle for a prized contract to supply a floating production, storage and offloading vessel for its revamped, deep-water Bonga South West project off Nigeria.

Industry sources said a significant number of floater fabricators have been sent expression of interest documents covering a 150,000 barrel per day FPSO and must file submissions next week. Among the players expected to reply to Shell’s approach are South Korean rivals Hyundai Heavy Industries and Samsung Heavy Industries, Chinese companies Cosco and CIMC Raffles as well as Dutch floater specialist SBM Offshore.

Upstream was also told that South Korea’s Daewoo Shipbuilding & Marine Engineering, Singapore-based SembCorp Marine, Italy’s Saipem and Malaysia’s Bumi Armada may participate, as could KBR, either as lead bidders or partners. Shell’s base-case plan is said to comprise the award of an engineering, procurement and construction contract for a newbuild FPSO but project watchers said that the supermajor will consider a converted vessel if newbuild costs do not meet its expectations.

“The basic, basic option is a newbuild,” said a well-placed source, “but each bidder can propose an alternative (conversion) option.”

Another project watcher agreed: “Basically, Shell is going for a newbuild EPC but they are going to get indications about the (conversion) concept and if this is attractive, (Shell) will think about it.”

A third source added: “Shell has been evaluating the various options, going the newbuilds route or going conversion with lease.”

Local content remains a key factor in any Nigerian tender process with the EoI documents calling for lead companies to specify their partners and which Nigerian engineering and fabrication companies they could work with.

Upstream understands that CIMC Raffles has tied up with Monobuoy Nigeria, a Lagos-based engineering concern that has a parent company from the US, while Cosco has joined forces with Technip and Abuja-headquartered Gastec.

One source also suggested CIMC may be co-operating with VME Process — a US-owned module fabricator with yards in Indonesia and Malaysia — and China Merchants Industry Holdings, owned by Hong Kong-based China Merchants Group, which is experienced in FPSO conversion work.

SBM is said to have linked up with China’s COOEC but its Nigerian partner is not known.

The same is true for Hyundai and Samsung, although in previous Nigerian projects and bid processes they have worked with NigerDock and Ladol, respectively.

It is not known which companies Daewoo or SembCorp — which owns Jurong Shipyard in Singapore — would partner with if they do participate in the Bonga South West EoI.

Upstream understands that the EoIs call for respondees to tell Shell which yards will handle major construction and associated activities.

This EoI process is a precursor to a formal bid process, which one source suggested could start as soon as July this year.

However, the exact timing will depend on when Doris Engineering and Lagos-based Netco complete front-end engineering and design work on the FPSO. This FEED work was originally due to complete this summer but appears to have slipped into the third quarter of 2017 or even the fourth quarter.

A final investment decision is targeted for 2018, with first oil flowing in 2021 or 2022.

The FPSO aims to exploit around 800 million barrels of recoverable oil from an oil-in-place resource of about 3.2 billion barrels.

The bulk of Bonga South West’s resources are located in OML 118 but it also extends into OMLs 132 and 140, operated by US supermajor Chevron, where it is called Aparo.

The remaining partners in the field are US giant ExxonMobil, France’s Total, Italy’s Eni and South Africa’s Sasol Petroleum.

Source: upstream