Breaking News

ENI’s Descalzi in double speak

IN what appears an ambiguity of sorts, the Chief Operating Officer (COO) of ENI Worldwide Exploration and Production, Mr.Claudio Descalzi has reaffirmed his company’s commitment to double its investment in Nigeria’s oil and gas industry, while also noting that uncertainties surrounding the new Petroleum Industry Bill (PIB) are, in his opinion, preventing the Industry from investing in the Country.

Mr. Descalzi made the disclosure recently while on a working visit to the Nigerian National Petroleum Corporation (NNPC) in Abuja.

Mr. Descalzi informed of the readiness of his company to invest more in the Brass LNG and the power plant projects which has remained largely on the drawing board. The promoters of the Brass LNG projects have still not taken the Final Investment Decision (FID) about 6 years after the project was actually mooted. Construction of the two trains, 10 million metric tons per annum capacity liquefied natural gas plant is expected to gulp about $3.5 billion.

Incorporated on 20th February 2004 as a company, four stakeholders in September 2006 signed the Shareholders Agreement for the Brass LNG Project. The shareholders were Nigerian National Petroleum Corporation (NNPC), ENI International, Phillips (Brass) Limited (an affiliate of ConocoPhillips) and Brass Holdings Company Limited (an affiliate of TotalFinaElf).

The shareholding structure of the company shows that the Nigerian National Petroleum Corporation holds 49 per cent; Eni, 17 per cent, Conoco Phillips, 17 per cent and Total, 17 per cent respectively.

The Final Investment Decision (FID) had suffered several postponements having been initially slated to be taken in December, 2006 but later moved to December, 2008 as a result of other contributing tentative factors. At that time, attack by militants was blamed as the major cause of the first rescheduling.

It would be recalled that ConocoPhillips, one of the shareholders, had in 2006, pushed for an indefinite postponement, following a surge in militant attacks and kidnappings in the Niger Delta.

However, the problem of availability and sourcing of the natural gas feedstock for the project seems to have assumed the front burner in the joint venture concerns.

In 2008, after assessing the availability of gas from the participating international oil companies, it was discovered that they could only guarantee about 70 percent of the natural gas feedstock needed for the project. And that was over a year ago. So the shareholders decided that they get the remaining 28 per cent gas needed before proceeding with the sealing of the FID.

In a piece submitted to LNGpedia, Ifeanyi Izeze, a communications consultant noted that ‘how the shareholders are going about sourcing the over 30 percent of the remaining gas feedstock could best be described as blurred and at worst obscured. With most of the production operations terribly slowed down in the onshore, swamp and near shore arena, the only option left for the supply of the balance feedstock remains the deep offshore arena.’

With regards to the on going discussions on the new Petroleum Bill, the Eni head said his group appreciates the approach adopted by the Nigerian Government in engaging and listening to the views of the companies and other stakeholders.

He expressed confidence that Federal Government will take the opportunity to elaborate reforms which will safeguard the investments in the sector.

Descalzi emphasised that, notwithstanding the global economic crunch in 2008 Eni has taken the decision to invest in the Oyo project together with its Nigerian Partner Allied and achieving completion within 20 months.

The COO confirmed that company is investing, in a significant way, in flaring down projects aiming at zero flaring in the Land Area of NAOC JV operations in the coming months.

Mr. Descalzi stated that one of the ways the Federal Government amnesty programme could be sustained was through the creation of job opportunities for ex- militants and other youths in the Niger Delta that are skilled in oil and gas field.

“My main message to you is that we are ready to invest in Brass LNG and for the second phase of the Independent Power plant in Kwale Okpai, I want to reassure you that we are ready to start working and we will be part of the financing of the project,” Mr. Descalzi declared.

In his response, Dr. Mohammed Sanusi Barkindo, the Group Managing Director of the NNPC lauded ENI for its multi-million dollar investment in Nigeria in the past few decades and assured of the safety of their investment even in the post PIB era adding that the contributions of stakeholders into the PIB was a clear demonstration of democracy in action.

“We consider you as a very important partner and despite the uncertainties being expressed about the bill, we are confident that the future holds a lot for us. We want to grow the oil and gas industry in Nigeria to international standard and we are confident that within the shortest possible time the legislative process will be completed,” Dr. Barkindo assured.

The GMD described the ENI power plant as a success story, noting that power is central to the Federal Government’s development plans for Nigerians because of its propensity to stimulate economic activities across the various spectrum of the society.

In March 2007, Eni signed a Production Sharing Contract with Nigerian National Petroleum Corporation, NNPC concerning the OPL 135 exploration license.

The area is located in the north-east of the Niger Delta, a short distance from the Kwale/Okpai treatment plants.
The agreement allows for strong co-operation with the Nigerian partners both in the operative and technical management of the activities, with the objective of supporting the development of local competencies and resources.

The PSC has an effective duration of 25 years: the first five years will be devoted to the exploration phase and the following 20 years to the development and production phase.


Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.