April 15, 2020

COVID-19: ExxonMobil to cancel two projects in Nigeria, others worth $16 million

Akwa Ibom youths protest, shut ExxonMobil over alleged marginalization

By Ediri Ejoh,

There are indications of more hit on Nigeria’s economy amidst the challenges of the spread of Coronavirus otherwise known as COVID’19, across the world.

To this end, oil giant ExxonMobil is set to cut short two of its contracts offshore Nigeria as well as others across the world which worth about $16 million.

In an update on its offshore drilling rig fleet from Borr Drilling Ltd, it stated that the company has received letters of award for work in the Asia/Pacific region for two of its premium jackups, of which one is a newbuild being activated, while terminating that of Nigeria’.

ALSO READ: Hoodlums on rampage: Attack police officer in broad daylight

“The contracts’ estimated duration, excluding options, are expected to be for 365 days and 200 days, respectively. The rigs are expected to start contracts in 3Q 2020.

“ExxonMobil has notified the company of the early termination of the contracts for the jackups Gerd and Groa offshore Nigeria. The rigs were under contracts originally committed until April 2021 and May 2021, respectively.

“The contracts for both rigs require 180-day notice for early termination. The company said it is in discussions with ExxonMobil with regards to planning the discontinuity of operations.”

ALSO READ: US government officials raise concerns about China over coronavirus

Meanwhile, Vanguard gathered from a source close to the company that such report was false.

“It’s all speculations, we are focused in dealing on the pandemic crisis as well would publicly put out any adjustment in our projects to the public.”

However, the statement added other projects to be stopped included “The drilling contractor has received notice to stop operations for the jackup Norve, working offshore Gabon for BW Energy. The rig finished operations in early April 2020, around three months before previously estimated.

“TAQA Bratani has opted to cut short the contract for the semisubmersible MSS1 in the UK. The rig finished its contract on March 25, 2020, one month earlier than previously estimated. The rig is entitled to an early termination fee as per contract provisions, the company said.

“Following its campaign with Neptune Energy offshore the Netherlands, the jackup Prospector 5 has arrived in Harwich. The next customer, Perenco, has elected not to proceed with the previously announced contract for the rig. The jackup is scheduled to start a contract with CNOOC in the North Sea between September and November 2020.”

The company explained that the net impact of the new contracts and the early termination of the existing contracts is estimated to affect the total revenue backlog negatively by about $16 million.

“In addition, the ackups Odin and Galarstarted operations for Pemex during 1Q 2020. The Njord is expected to begin its contract with Pemex soon. Also, the jackup Saga started its contract with Eni offshore Vietnam in February 2020.”

Borr added it could be subject to more contract suspension notices given current market conditions.

In a similar development, a total of 60 Nigerian crude oil cargoes have not been sold despite the reduction of the official selling prices by the Nigerian National Petroleum Corporation, NNPC.

A glut of Nigerian and Angolan crude weighed on the market on Tuesday with demand from China slower than in the last few weeks, Reuters reports.

“It’s a buyer’s market right now,” one trader was quoted as saying, adding that nothing was shifting.

According to Reuters, the glut of unsold Nigerian oil was around 60 cargoes for April and May, and cargoes of Qua Iboe and Bonny Light crude continued to be offered at around dated Brent minus $3.

The NNPC was reported in March to have cut its April official selling prices for Bonny Light and Qua Iboe, two of the nation’s major grades, by $5 per barrel to dated Brent minus $3.29 and minus $3.10 per barrel, respectively.