Stakeholders in the oil and gas industry may soon begin to enjoy the ease of doing business as the problems associated with contracting circle in the industry which has been responsible for projects delay and in some cases heighten the cost of projects is to be reduced to the barest minimum.
Contracting circle for projects in the industry has between 24 to 36 months, meaning that an average projects from conception to the time of they would start to executive it could be between 24 and 36 months.
This situation has discouraged investments in the industry because inflation set in thereby increasing the cost of projects. Nigeria has the longest contracting circle among it peers in crude oil production in West Africa and perhaps in the world.
This follows the signing of a Service Level Agreement (SLA) aimed at shortening the often protracted industry contracting cycle between the Nigerian Content Development and Monitoring Board (NCDMB) and the Oil Producers Trade Section (OPTS), the umbrella body of major international and indigenous operating oil companies on Wednesday in Lagos signed a Service Level Agreement (SLA) aimed at shortening the often protracted industry contracting cycle.
The SLA with the OPTS is sequel to the one entered between the Board and the Nigerian Liquefied Natural Gas Company (NLNG) in May 2017, which was the first between a regulator and another entity in the Nigerian oil and gas industry.
The agreement commits the 28-member OPTS companies to comply with the provisions of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, essentially to submitto the NCDMB documents like their Quarterly Job Forecasts, Nigerian Content Plans, Bidders Lists, Nigerian Content Evaluation Criteria, Nigerian Content Technical Bids among other relevant information in relation to industry contracting and procurement cycles. On the other hand, the Board pledged to respond on specific timelines and committed that should it fail to meet the set deadlines, the companies can proceed with their tendering processes after duly informing the Board.
Simbi Wabote executive secretary NCDMB, signed on behalf of the Board, while the Paul McGrath, managing director of ExxonMobil Nigeria, signed on behalf of the OPTS.The Massimo Insulla, managing director of the Nigerian Agip Oil Company (NAOC), Jeff Ewing, managing director of Chevron, and Nicolas Terraz, managing director of Total Exploration and Production Nigeria, witnessed the event.
Speaking at the event, the executive secretary explained that theSLA with the OPTS was in furtherance of the Board’s efforts to meet the target set by the Minister of State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, for the industry contracting cycle to be shortened to six months. Through the efforts of the NCDMB, the cycle had been cut significantly to 14 months from 24-36 months.
Wabote stressed that operations of the oil and gas industry were time sensitive adding thata shortened contracting cycle would cut the cost of projects considerably.
He noted that the SLA signed with the NLNG had improved the turn-around time of approvals between the two establishments,informing that the Board was working to sign a similar agreement with the Indigenous Petroleum Producers Group (IPPG).
In his comments,the Managing Director of ExxonMobil thanked the Executive Secretary for the wonderful initiatives he had introduced since assuming office a year and half ago. He stated that the OPTS members contributed in the development of the SLA and they will ensure compliance.
Olusola Bello
