Oilserv positions Nigerian capacity for N22.8 trn transnational pipelines

Sopuruchi Onwuka

Nigerian companies are ready and well prepared to participate in the construction of the two transnational pipelines that are conceived to open new market for the country’s natural gas resources in Europe.

The companies which are provided fertile policy ground for capacity growth under the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010 boast of robust African capability for world class performance in big ticket project delivery. And they see opportunity to showcase their proficiency in the Nigeria-led twin pipeline projects expected to be launched soon.

Managing Director of Oilserv Group, Sir Emeka Okwuosa, declared in an interview with journalists weekend that the company alongside other Nigerian engineering companies that specialize in pipeline construction has established convincing pedigree in delivering pipeline projects even in difficult and challenging terrains.

Sir Okwuosa, an eminent industry engineer, was responding to questions on the capacity status of his company and other indigenous companies groomed under the Nigerian Content policy of the government in the petroleum industry. He made it clear that robust indigenous and local capacity for industry job delivery have been developed in Nigeria, pointing at the full local capacity at the Oilserv Group.

He noted that the rising capacity of Nigerian companies in facilities and infrastructure development is critical to realization of prime national aspirations for gas utilization and monetization. He pointed out that the prevailing mismatch between the volumes of gas produced and the actual volumes consumed or sold by the country reflect the infrastructure gap between the industry and the market.

Sir Okwuosa highlighted the crucial role of gas in the global energy mix in the immediate to long term, saying that whereas oil remains relevant energy resource today, gas would remain relevant into the future. He also pointed at the role of natural gas as energy catalyst for Nigeria’s industrialization and a reliable channel for sustainable resource revenue.

The Oracle Today reports that whereas Nigeria holds gargantuan 206 trillion cubic feet of natural gas reserves, it posts huge volumes of associated gas flared and reinjected at oil production sites. The country’s gas export facilities are limited to six-train Nigerian Liquefied Natural Gas (NLNG) Limited with capacity for moderate 22 million tonnes of liquid gas export per year, and the West African Gas Pipeline (WAGP) which suffers fixed and rigid from three fledgling West African economies of Benin, Togo and Ghana.

According to Sir, Okwuosa, the biggest bottleneck into the full economic and revenue benefits of natural gas for Nigeria today is connectivity: pipelines and liquefaction facilities for internal distribution and international sales.

He said a lot of existing and future energy projects across the globe would be on gas, explaining that gas is such an inventory riser for the right set of production, distribution and utilization infrastructure. 

“You have to build infrastructure that would match production with transportation and utilization. That is why you have pipelines; that is why you have LNG and CNG technologies for virtual transportation of gas. These take gas to utilization.

“The point is that the biggest issue as of today is how we develop the infrastructure that will enable the distribution of gas. The more we deliver, the more we encourage the upstream to produce. There has to be alignment. And in doing that, building the infrastructure signals the offtakers to also build their utilization systems including industries and power plants that will guarantee consumption of the gas.

“So that is the way it is interconnected, and so it is always a moving tide. But obviously what is important is to develop a robust system that would obviously develop over time,” Sir Okwuosa explained.

On the proposed gas export pipelines that would connect Nigerian gas to the European market, Sir Okwuosa declared the readiness of Oilserv and other indigenous companies to display capacity in delivering the two transnational pipelines that will take cumulative budget of $38 billion or N22.8 trillion.

The Oracle Today reports that government has reached Memoranda of Understanding with other African countries to drive a Trans-Saharan Gas Pipeline (TSGP) that would provide conduit for natural gas produced from oilfields in the Niger Delta to flow across several countries in Central and North Africa before crossing Mediterranean Sea to Europe.

The length of the pipeline would be 4,128 kilometres, with 1,037 kilometres laid in Nigeria; 841 kilometres laid in Niger, and 2,310 kilometres hosted in Algeria.

In June 2022, the energy ministers of Algeria, Niger, and Nigeria reached an understanding to give fillip to the project which has remained in feasibility stage over a decade. Gas is expected to flow in the TSGP from the Escravos production hub in Warri, Delta State through the Obiafu-Obrikom-Oben (OB3) and the Ajaokuta-Kaduna-Kano (AKK) pipelines Algeria’s Hassi R’Mel feeder hub on the Mediterranean coast. From there, the TSGP gas is planned to be pumped through existing undersea Trans-Mediterranean Pipeline to Europe.

The pipeline system supported by the European Union is envisaged to channel about a trillion cubic feet of natural gas annually from Nigeria to North Africa and Europe. And governments of countries hosting the pipeline have agreed to set up a technical team that would revisit existing feasibility work on the project. The initial feasibility study conducted by Penspen Limited was completed in September 2006, and it found the pipeline to be technically and economically feasible and reliable.

The TSGP makes a cash call of significant $13 billion or N7.8 trillion, and some $10 billion or $6.0 trillion of the project budget is assigned to equipment and construction; and $3.0 billion or N1.8 trillion is mapped out for building gas gathering hubs.   

Besides the TSGP is also the Nigeria-Morocco Gas Pipeline (NMGP), a newly conceived regional onshore and offshore gas pipeline that is intended to deliver natural gas from Nigeria to 13 countries in the West and North Africa as a continuation of the existing West Africa Gas Pipeline (WAGP) which currently supplies Nigerian natural gas to Benin , Togo, and Ghana.

The Nigerian National Petroleum Company Limited (NNPCL) and Morocco’s National Office of Hydrocarbons and Mines (MNOHM) had in September signed a memorandum of understanding (MOU) on the project. The 15-nation Economic Community of West African States (ECOWAS) is also a signatory to the MOU.

The 5,600 kilometer NMGP calls for investment of $25 billion of N15 trillion in Engineering, Procurement and Construction (EPC) works for laying  a hybrid offshore and onshore pipeline that will progress the WAGP from Ghana to the Mediterranean coastline in Morocco. From there gas from the NMGP is planned to connect to Spain.

The commercial viability profile of the two transnational gas conduits gets boost from prevailing gas crunch in Europe and the race by producing countries to grab space in the hug market share conceded by Russia in the ongoing row with the West over the war in Ukraine.

Europe has relied on Russia for cheap gas, and the prevailing scramble to fill the gaps created by Russian gas cut comes with price jumps associated with importation of liquefied natural gas (LNG). The situation is made worse by limited regasification capacity in countries that traditionally get cheap pipeline gas.

Connecting huge Niger Delta gas reserves to the European market offers Nigeria the potential to take the position of Russia as main gas supply factor in the European market. It will also aid realization of multiple policy objectives of reducing flares and reinjection of associated gas at production sites and also boosting Nigeria’s foreign exchange earnings from gas exports.

Besides, the construction of the pipelines opens the immediate benefits of absorbing huge Nigerian content in the construction phase and optimizes the growing local capacity for international competition in the EPC pitch.

Policy driver, the Nigerian Content Development and Monitoring Board (NCDMB), has remained insistent that the objective of the Nigerian Content Law transcends Nigerian petroleum industry projects to targeting the competitiveness of Nigerian contractors in the global industry space.

Executive Secretary, Engr Simbi Wabote, said substantial business opportunities offered by mega-pipeline projects call for contributions from specialized service providers in project management, construction, trenching and excavation, pipe laying, welding, fitting services, equipment integrity tests, flow measurement and maintenance, corrosion solutions and many more.

The complex nature of EPC contracts, he explained, makes it necessary to form consortiums that involve companies in specialized niches.

Sir Emeka Okwuosa declared in the interview that Oilserv and other Nigerian contractors have eminently demonstrated the capacity and technology for world class pipeline construction jobs.

The Oracle Today reports that Oilserv has delivered many high profile and technically challenging pipeline projects in Nigeria, including the OB-OB, OB3 and AKK pipelines. The AKK pipeline forms the lead-out terminal from where the TSGP is expected to connect.

“The Trans-Saharan Gas Pipeline is actually one of the two major international pipelines that are being envisaged. The pipeline is the one that will take off from Kano and go through Niger Republic and Algeria and end up in Europe,” Sir Okwuosa said.

He said that Oilserv is always ready and well prepared to be able to make the difference in the delivery of the emerging pipeline projects in the continent. He added that the company has achieved a lot in the country over the past 25 year of its operations, using experienced and determined indigenous workforce to deliver world class services in the petroleum industry and other sectors the economy.

“Yes, we have been involved in many projects; and we have been able to deliver many difficult projects: difficult in technical, difficult in environment and difficult sometimes because of the politics of what we do as human beings and organizations, and also difficult due to issues of security,” he noted.

According to him, Oilserv has built several pipelines in difficult terrains: some on land, some in swamps and some on mountains and some across rivers. He expressed delight that a Nigerian company can develop the necessary skill sets and capacity that would enable development of oil and gas facilities of world class standards.

He pointed at the TSGP and the NMGP as the main focus of attention in the industry, adding that the projects provide opportunities for partnerships among major service providers in the industry.

Sir Okwuosa declared that Oilserv is following developments around the two transnational pipeline projects, and would “want to be part of it because we have the capacity.”

Sir Okwuosa, who received the national honour of Commander of Order of the Niger (CON) from President Muhammadu Buhari, recounted the contributions of Oilserv in development of key national pipeline infrastructure. While thanking the president for the recognition, he said that “the truth is that at any time there is always much to do.”