The Senate, yesterday, constituted an adhoc committee to investigate the local content elements and cost variations of the Egina Oil Field Project.
Two other related Bonga Southwest and ZabZaba projects are also to be investigated for the same purpose.
The resolution followed a motion by Chairman, Senate Committee on Local Content, Senator Solomon Adeola and 18 others.
The upper chamber asked the committee to include in the probe, a public hearing on the project and ensure there are no future changes to necessitate further variations of the project cost.
Adeola told the Senate that contracts were awarded to the various components of the Egina project.
The Lagos senator expressed concerns that many of the contractors handling the project were found to have engaged sub-contractors to provide various aspects of the project components.
He said the Egina project was expected to comply with the provisions of the Nigerian Oil and Gas Industry Content Development Act of 2010.
He said: “At inception, the project was estimated to cost 6 billion dollars but has undergone various cost variations that currently put its cost at over $16. 352 billion.
“At inception, the project boasted of 24 million man-hours of work done representing 77 per cent of the work load for the project and equivalent to a workforce of 3000 persons on average over a period of five years. It is worrisome that over the life of the project, its cost components have been reviewed twice from the initial $6 billion to $13 billion and more recently $16.352 billion.
“Meanwhile, petitions have been submitted to the effect that monumental fraud and acts of disregard for the Nigerian Oil and Gas Industry Content Development Act of 2010 abound on the procurement and contractual arrangements.
“Egina project is located within the Oil Mining Lease(OML) block 130 and covers an area of about 500 square miles. It is developed by Total Exploration and Production Nigeria Limited(24 per cent) in partnership with CNOOC Energy Nigeria Limited(45 per cent), Petrobas(16 per cent), Sapetro(15 per cent).
“The essence is to contribute an estimated 20,000 barrels of oil per day to the Nigerian daily oil production from the planned 2018 commencement date and the oil field is situated at water depth of up to 1,750m. Meanwhile, engineering studies for the Egina Oil-Field Project began in 2008, with an approval of the National Petroleum Investment Services (NAPIMS)and the Department of Petroleum Resources (DPR) in 2008 and 2009 respectively.
“The Egina project was conceived as a deep offshore field comprising of a Floating Production and “Offloading Vessels(EPSO). It was also conceived as an Oil Offloading Terminal and Subsea Production Systems.’’
Senate President Bukola Saraki, in his remarks, said the issue of cost variations and lack of adherence to the local content law were paramount.
Saraki charged the committee to take the investigation seriously, adding that the allegations were enormous and should not be treated with levity.
He said: “I find it difficult to understand why cost variation will move from $6 billion to $16 billion in 10 years. Why such variations and when will the Federal Government ever get revenue on these fields.
“If we allow this to go with the Egina project, other deep offshore will follow the same model and government will never get the revenue. The second issue is to ensure compliance with the local content law. The committee has the responsibility to turn in the report as soon as possible. We do not want the report to linger on.
“Please ensure you are done in three weeks so that by the time we resume we will consider the report and be able to address other projects that are going on.’’
Chairman of the ad-hoc committee is Senator Solomon Adeola, while other members include Senators Godswill Akpabio, Tayo Alasoadura, Gershom Bassey, Kabiru Marafa, Philip Aduda, Albert Akpan, Ahmadu Abubakar, David Umaru, Chukwuka Utazi and Stella Oduah.