Saipem Secures $1bn Contract for Bonga North Project Offshore Nigeria

Saipem, alongside two Nigerian firms, has clinched a significant offshore contract valued at approximately $1 billion with Shell for a deepwater oil and gas project off Nigeria’s coast, according to Offshore Energy magazine.  

The contract, awarded by Shell Nigeria Exploration and Production Company Limited (SNEPCo), involves Saipem delivering Engineering, Procurement, Construction, and Installation (EPCI) services. This includes risers, flowlines, subsea umbilicals, and associated subsea infrastructure for the Bonga North Project, located 130 kilometres offshore Nigeria.  

The design and fabrication will largely take place in Nigeria, engaging local suppliers and subcontractors, underscoring a commitment to indigenous participation in the project, the report added.  

The contract, secured in partnership with KOA Oil & Gas and AVEON Offshore, carries a total value of about $1 billion, with Saipem’s share estimated at $900 million.  

Additionally, TechnipFMC will supply Subsea 2.0 production systems for the development. These include the design and manufacture of subsea tree systems, manifolds, jumpers, controls, and related services, according to the report.  

The Bonga North project, situated in water depths exceeding 1,000 metres, will link to the Shell-operated FPSO Bonga in OML 118, which has been operational since 2005. The FPSO, capable of producing 225,000 barrels of oil per day, achieved a milestone in 2023, surpassing one billion barrels of crude oil production.  

Shell detailed the project’s scope, which includes drilling, completion, and commissioning of 16 wells—eight for production and eight for water injection. It also involves modifications to the existing FPSO Bonga Main and new subsea hardware, supported by Akselos’ structural digital twin technology implemented in 2020.  

TechnipFMC’s contract, described as substantial and valued between $250 million and $500 million, will cover the design and manufacture of critical subsea equipment, including tree systems, manifolds, jumpers, controls, and services.  

Jonathan Landes, president of subsea at TechnipFMC, said, “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. This award further positions us for future deepwater opportunities in the region.”

The award will be included in TechnipFMC’s inbound orders this quarter of 2024.

Last week, SNEPCo, a subsidiary of the UK-headquartered Shell, made a Final Investment Decision (FID) for a deepwater oil and gas project off the coast of Nigeria, which will be developed as a subsea tie-back to an existing floating production, storage, and offloading (FPSO) unit.

Shell’s investment in the Bonga North project is expected to generate an Internal Rate of Return (IRR) over the hurdle rate for the firm’s upstream business, which continues to look for ways to boost performance through near-field opportunities, like Bonga North, leveraging technical expertise, strong partnerships, and a model built on simplification and replication.

Shell believes Bonga North will help ensure its integrated gas and upstream business continues to drive cash generation into the next decade. The operator expects the project to sustain oil and gas production at the Bonga facility because of its estimated recoverable resource volume of over 300 million barrels of oil equivalent (boe).

The Bonga North project’s peak production is forecast to be 110,000 barrels of oil per day, with the first oil anticipated by the decade-end, it said.

SNEPCo (55 percent) operates the Bonga field in partnership with Esso Exploration and Production Nigeria (20 percent), Nigerian Agip Exploration (12.5 percent), and TotalEnergies Exploration and Production Nigeria (12.5 percent), on behalf of the Nigerian National Petroleum Company Limited (NNPC).

Shell’s Integrated Gas and Upstream Director, Zoë Yujnovich, had said, “This is another significant investment, which will help us to maintain stable liquids production from our advantaged upstream portfolio.”

This comes after Shell made arrangements in January 2024 to divest its interest in the Shell Petroleum Development Company of Nigeria Limited (SPDC) joint venture (JV), with a net book value of around $2.8 billion, aiming to turn all its attention to deepwater and integrated gas businesses in the African country.