Incompetent Local Contractor Delays First Oil in Akepo Field

13 Nov 2012

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Efforts by the Federal Government to encourage oil Exploration and Production (E &P) companies to patronise indigenous contractors have received a blow as incompetence of a local contractor has delayed first oil in Akepo field located in Oil Mining Lease (OML) 90 in Delta State, THISDAY has gathered.

The Federal Government enacted the Nigerian Content Act of 2010, which stipulates that indigenous contractors should be given preference in certain categories of contracts in the E & P business.

THISDAY however gathered that while some of these indigenous contractors had built capacity and demonstrated competence, few others lack capacity to execute world-class projects as stipulated in the Nigerian Content Act.

It was learnt that lack of competence on the part of one of the local contractors involved in the development of the Akepo oil field has delayed first oil in the project.

A source close to the project told THISDAY that the effort of Sogenal Oil and Gas Limited, operator of the field to hit first oil was being hampered by one of the indigenous contractors’ lack of experience and capacity to deliver on schedules.

According to him, the project was initially billed to deliver first oil in May 2011 but the milestone was shifted to May 2012 and later November 2012 before the new target date of February 2013.

Sogenal Oil and Gas Limited’s new target to commence commercial production of oil in the field is February next year, at an initial output of 2,000barrels per day.

This implies that the project was behind scheduled for more than one year because of the incompetence of one of the indigenous contractors.

“The biggest challenge facing us is from one of the local contractors, who has delayed our first oil from May 2011 to May 2012; to November 2012 and now to February 2013,” said the source close to the project.

This development, it was learnt, has led to the escalation of the cost of the development of the oil field, even though the project is a Sole Risk, without government support or funding.

THISDAY gathered that in line with the provisions of the Nigerian Content Act, more than 95per cent of the contractors engaged by Sogenal Oil and Gas Limited for the development of the field are indigenous contractors.

Akepo Filed was originally awarded to Chevron Nigeria Limited under the Chevron/NNPC joint venture before it was awarded to Sogenal Oil and Gas Limited under the Federal Government marginal field programme.

Sogenal had initially farmed out 30 per cent of the field to Oando Plc and 10 per cent to Exile Resources Limited of Canada.
However, with the recent acquisition of Exile Resources Limited by Oando Plc on the Canadian Stock Exchange, Oando’s participating interest increased to 40 per cent, while Sogenal retains 60 per cent and operatorship of the field.

Tags: Business, Nigeria, Featured, Akepo oil Field

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