Nigeria to cut contracting cycle in oil industry to six months, says Kachikwu

Ibe-kachikwuThe Federal Government is determined to cut the contracting cycle in the country’s oil and gas industry from the current average period of two to four years, to just six months, Minister of State for Petroleum Resources, Ibe Kachikwu, said.

A contracting cycle is the duration between the initiation of the bidding process through registration of contractors and actual award of contracts for projects executed in the oil and gas industry.

The Minister was speaking in Calabar at the Nigerian Content Policy workshop organized by the Senate Committee on Petroleum Resources (Upstream).

He said the long contracting cycle in the industry was responsible for the high cost per barrel of the crude oil produced by Nigeria compared to other member countries of the Organization of Petroleum Exporting Countries, OPEC.

The Chairman, Petroleum Technology Association of Nigeria, PETAN, Emeka Ene, said recently that Nigeria current spends an average of $30 to $35 to produce a barrel of oil.

The Minister, who was represented by a Group General Manager, Sajebor Stephen, said the contract approving entities were already implementing a new strategy to develop a single contracting procedure for the industry.

The procedure, which would soon be unveiled for the industry, Mr. Stephen said, would help eliminate problems associated with multiplicity of bidders, application of manual tools in bid evaluation and divergent tender requirements by approving entities.

The approving entities include the Nigerian Content Development and Monitoring Board, National Petroleum Investment Management Services, and the International Operating Companies.

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To facilitate contract opportunities in the industry, Mr. Stephen said that companies that have already invested heavily in the economy and become local content champions for specific work scopes would soon be categorized to enhance transparency as well as boost investors’ confidence.

He said a number of Nigerians have been motivated by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act to acquire high cost marine vessels and other facilities like oil rigs for use in the industry.

The Minister said provisions of the Act would seek to give preference to Nigerian-owned asset, particularly in tenders related to utilization of rigs and marine vessels in the industry.

He said with the emergence of a new crop of indigenous owners of marine vessels, the new focus would be on the local construction of vessels.

With the assessment of shipyards already ongoing, the minister said government was determined to provide incentives and enablers that would allow local yards to construct vessels at competitive costs.

He identified the Lagos Deep Offshore Logistics Base, LADOL, as tone of the beneficiaries of the Nigerian Content Development Fund, NCDF, for its ongoing fabrication and integration yard expansion.

Government, he said, was currently reviewing the operating model for NCDF to enable more Nigerians access the fund for commercial and developmental interventions.

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