Shell has delayed expansion work at its Nigerian offshore Bonga field by two years, dealing a major blow to the West African nation’s quest to expand crude production after a series of technical and operational setbacks, a report said on Wednesday.
Shell, along with its partners, signed a deal with Nigeria’s state-run oil company in May 2021, paving the way for a major expansion of the country’s Bonga oil and gas field.
In the past, the project had been shelved due to a tax dispute with Shell, the field’s operator.
Shell invited bids once again after the dispute was resolved to construct a new floating production, storage, and offloading (FPSO) unit for the Bonga Southwest deepwater oil field in Nigeria.
S&P Global Platts reported, however, that the response to the tender had been underwhelming.
“There has been a delay in progressing with the tendering process for the Bonga Southwest field. The tenders have been put on hold till around 2024,” the firm said.
An official of the Shell Petroleum Development Company, Nigeria confirmed that the award of the contract for the construction of the 150,000 barrels per day Bonga Southwest FPSO has been postponed.
The delay, however, could be related to changes in Shell’s strategy as part of its net zero goal.
A lack of commercial and security issues has soured relations between Shell and Nigeria in recent years.
Nigeria’s first deepwater oil field, Bonga, currently has a capacity of 225,000 b/d crude oil production and 150 MMcf/d gas supplies which feed the Nigeria Liquefied Natural Gas (NLNG) plant in Bonny.
Nigeria’s oil reserves could increase by around 1 billion barrels by developing Bonga Southwest. The Bonga Southwest project would be developed in three phases, Shell previously announced.
Nigeria was counting on the field output to increase production to around 3 million barrels a day by 2023, NNPC officials said.
Due to operational, technical, and sabotage issues, Nigeria’s oil production has slumped to multi-decade lows.
Platts estimates that in 2021, Nigeria’s crude and condensate output will hover near 1.55 million b/d, despite its capacity to pump 2.2 million b/d.