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UpstreamOnline: Nigerian senate delays debate over Bonga overspend

DISCUSSION by the Nigerian Senate of a report concerning cost overruns at Shell’s deep-water Bonga development and other major projects has been postponed until after the Easter recess, writes Barry Morgan.

According to Senator Lee Maeba, the delay is due to protracted debates over the Nigeria Content Bill, which are expetected to continue next week.

Maeba, who is chairman of the Senate Committee on Petroleum (Upstream), said he was pressing for sanctions against operators with project costs that had become “inflated and unreasonable”, arguing key items should be set against insurance and not deemed recoverable.

A Shell source said the company was not alone in deciding on the early despatch of the Bonga floating production, storage and offloading vessel to Nigerian waters.

“This was a decision taken jointly with partners, including the Nigerian National Petroleum Corporation,” he said. “It must be viewed in the context of political uncertainties at that time, and…that an additional 30 producing wells were included in the programme to ensure the FPSO was fully occupied as the first set declined.”

The source said an initial figure of $2.7 billion did not take into account these unforeseen costs, and that subsequent FPSO projects by other operators, had been able to learn the lessons from Bonga. Shell has formally said that it co-operated fully with the Senate committee and now awaits its recommendations.

Maeba and his committee have spoken about banning Bonga contractor Amec from working in Nigeria, but this is seen as unlikely to happen.

Bonga has boosted Nigeria’s production at a time when output from traditional sources in the troubled Niger Delta has faltered.

Amec declined to comment.
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20 March 2008 00:01 GMT  | last updated: 20 March 2008 00:01 GMT

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