Yinson Holdings agrees to supply FPSO to Nigerian oil firms

Malaysia’s based Yinson Holdings Bhd has announced plans to supply a Floating Production Storage and Offloading (FPSO) unit to Nigeria’s based First Exploration & Petroleum Development Company Ltd (FIRST E&P) to process hydrocarbons offshore in Nigeria.

Yinson Holdings said its indirect unit had entered into a Heads of Terms (HOT) with its associate Yinson Operations & Production West Africa Ltd and FIRST E&P to negotiate the potential supply and charter of the FPSO for the processing of hydrocarbons from the Anyala & Madu fields under Oil Mining Leases 83 and 85.

Luqman Agboola head of energy and infrastructure at Sofidam Capitals Limited said what FIRST E&P is doing is not new to the​ ​global ​oil and gas sector, although Nigeria is not yet familiar with it yet.

The HOT is intended to create a mutually exclusive relationship between the Parties and to facilitat​​e exclusive negotiations between the Parties for the provision and operation of a FPSO in the Fields.

“They are firming out there activities in a way that doesn’t cost you capital outlay at the initial stage which will saves them a lot of money for investment and help them manage their operational and CAPEX cash flow,” Agboola said.

Yinson said although subject to negotiations​ ​it would supply an FPSO for the initial term of the bareboat charter of seven years. FIRST E&P would have an option to extend the term for another eight years.

The negotiations will be on the terms of a Bareboat Charter as well as an Operations and Maintenance agreement as Yinson expects to seal the deal by June 30, or at a later date mutually agreed by the parties.

In June last year, FIRST E&P announced it had reached an agreement with the world largest oilfield services company, Schlumberger Limited for the development of the same OML 83 and OML 85.

Under the agreement, Schlumberger was supposed to provide over $700 million development cost of the Anyala and Madu fields which would generate 193 million barrels of crude oil into the current reserves of 37.2billion barrels and an additional 800 billion cubic feet of gas into the nation’s proven gas reserves.​

All efforts by BusinessDay to inquiry from FIRST E&P about the present status of its agreement with Schlumberger Limited proved abortive as the company failed to give more information and also​ ​failed to ​confirm if it will affect its new deal with Yinson Holdings.

In terms of daily production, the fields will yield 50, 000 barrels of crude oil per day and 120 million standard cubic feet of gas per day by early 2019. 

FIRST E&P, established in 2011, owns 40percent of the rights to the fields with the remaining 60 percent being held by Nigerian National Petroleum Corporation (NNPC) which were acquired from Chevron Nigeria Limited (CNL)

OML 83 covers an aerial extent of 125 sq. km, with Anyala field as the only discovery within the acreage while Madu field which is the main discovery within OML 85, has an aerial extent of 521 sq. km. Anyala field is located at a water depth of 55m, about 45 km off the coast of Bayelsa State.

Other assets of FIRST E&P are a 45 percent working interest in OML 34 and OML 75 which were divested from Shell Production Development Commission Joint Venture in 2012 and 2015 respectively. FIRST E&P also has a 10 percent interest in a joint venture with Dangote Industries Limited to build the East West Offshore Gas Gathering System pipeline.

The propose FIRST E&P  FSPO project is not the first this year; in January 2018 Nigeria itched towards the realisation of the$16billion Egina project as its FPSO, the largest in the country and indeed in Africa arrived Lagos Deep Offshore Logistics Base (LADOL).

Egina is the deepest offshore development carried out so far in Nigeria, with water depths over 1,500 meters. Its operation has already started  generating significant activities for local contractors, in various sectors and will continue to provide avenues for the training and development of Nigerians in various domains.

The project is currently being operated by Total Upstream Nigeria Limited, TUPNI on behalf of it partners, Nigerian National Petroleum Corporation, NNPC, Total Upstream Nigeria Limited, Sapetro and Petrobras.