20 July 2018

Nigeria: Harnessing Local Content to Grow Nigeria's Oil, Gas Industry

The new frontier for oil and gas multinationals operating in Nigeria today is the deep offshore base. This new trend comes with its challenges and opportunities. The question that readily comes to mind is how prepared are the regulators as well as indigenous players in the industry to participate in this new terrain. FESTUS OKOROMADU writes on the need to enhance in-country potentials learning lessons from the Total Egina FPSO experience.

The Nigeria Oil & Gas Conference & Exhibition(NOG) 2018, held at Abuja, recently brought to the fore the urgent need for stakeholders in the industry to seek alternative more economically viable ways of remaining in business profitably in the sector.

The theme of this year's conference, 'Driving Nigeria's Oil & Gas Industry Towards Sustained Economic Development & Growth,' could have come at better time than now.

With the global price of crude oil always fluctuating only those with dynamic strategies for survival can continue to win in the globally competitive oil and gas market.

Not only is it becoming more challenging to attract foreign investment, but the constant rise in the competition for the available funds makes it critical for in-country capacity upgrade which would pave way for sustained development and growth.

Offshore Deep Water Exploration

Nigeria is endowed with huge deep-water crude oil and gas resources and because various of reasons including cost and security, the multinational oil companies are drifting towards more participation in the offshore exploration and production.

This is evident in the several large deep-water discoveries still to be developed, such as Bonga South West or Owowo.

As rightly noted by the deputy managing director, Deep Water, Total Upstream Companies in Nigeria, Mr. Ahmadu-Kida Musa, in his keynote address at the NOG,

"As the industry moves even further offshore, the need for this know-how cannot be over-emphasised," he said.

Speaking of how to take advantage of the development bearing in mind lessons learnt from the Total Floating Production Storage and Offloading (FPSO) platform, Total's Eniga FPSO, he said, "Nigeria must move up to a level where it is able to meet the competency needs of other new entrants within the Africa sub-region and be considered as a technological hub for the region."

On the home front, Musa stated that careful legislation and government policies could also have great impact in other sectors of the economy, including information & communication technology, agriculture, engineering and construction, manufacturing, transport and storage, power, and finance.

Egina Project

On April 22, 2010, the Nigerian Oil & Gas Industry Content Development Act was signed into law, paving the way for a change to how the business of Oil & Gas was done in Nigeria.

The NOGICD Act ushered in an era where in-country value became the focus. With the government now leading the charge with legislation and efficient monitoring through the (Nigerian Content Development & Monitoring Board (NCDMB), rapid transformation began to take place.

It was against this backdrop that Total took the final investment decision to develop Egina in 2013, three years after the Nigerian Oil & Gas Industry Content Development Act became law.

Egina is the latest of Total's deep-water developments, and the third project of its kind developed by Total in Nigeria, after Akpo and Usan.

The Egina FPSO is said to have advanced Nigerian content law to new levels in the following domains:

Project management

All the project management teams, for both Total and the main EPC Contractors, have been based in Lagos - a first for a Nigerian FPSO project. The location of these teams in Nigeria to carry out engineering and procurement activities has generated significant employment opportunities at various skill levels ranging from office administrative staff to top level engineers and managers.

The Detailed Engineering of the Egina FPSO Topsides was executed in-country by Samsung with a consortium of Nigerian engineering companies (NETCO, DeltaAfrik and IESL), employing about 250 Nigerian engineers.

Similarly, the Detailed Engineering for all the other work packages was executed in Nigeria, in association with local engineering companies like DeltaTek and Crestech.

The project led to the development of Infrastructure. A new fabrication and Integration yard was built and it was Africa's first FPSO integration quay. It was, constructed under the FPSO package contract by SHI-MCI, within Lagos Deep Offshore Logistics Base on LADOL Island.

The Egina project is currently the first to record the fabrication and integration of FPSO topsides in Nigeria. Six of the 18 topside modules were fabricated and integrated at the SHI-MCI facility at LADOL.

In addition to the new SHI-MCI integration quay, several existing yards and manufacturing sites in other parts of Nigeria were upgraded for the fabrication of various components of the Egina project in Port-Harcourt, Onne and Lagos.

Xmas Trees Assembly and Testing at TFMC Onne yard.

For the first time, all Xmas trees were fully assembled and tested in Nigeria for a deep offshore project of this magnitude.

Buoy Fabrication and Launching.

The Egina Loading buoy was fabricated in Port-Harcourt in the same yard as the Manifolds.

Overall, an impressive 60,000 tons of equipment were fabricated in Nigeria and this represents 35 per cent of fabrication for the entire project.

Setting A Benchmark

On Tuesday, February 13, 2018, the Minister State for Petroleum Resources, Dr. Emmanuel Ibe Kachikwu, and the executive secretary, NCMDB Engr. Simbi Wabote, visited the Egina FPSO on LADOL Island.

After a tour of the unit, Wabote announced that Total with Egina Project has set the bar for others and the next target "is to stretch the limit to get more for Nigeria. Our aspiration is that come the next seven to eight years, full integration of an FPSO must happen in Nigeria."

According to Musa, the executive secretary's remark offers a very clear hint as to which direction the Nigerian oil & gas Industry should be looking as the country move past Egina.

He added that, six out of the 18 topside modules of the Egina FPSO were fabricated in Nigeria, lifted in Nigeria and fully integrated in Nigeria.

Assembly of the integrated control and safety system of the FPSO would be fully performed in-country, he stated.

According to the deputy managing director, Deep Water, Total Upstream, to keep the industry alive, there have been drastic efforts by operators focused on reducing the cost of new deep-water projects in order to make sure that they can sanction projects and bring value at $50 per barrel in the past three years.

NCMDB's Contributions So Far

There are indications that the board of NCMDB is handling the responsibility placed on them by the NOGICD Act with all sense of seriousness.

This is evidenced in the presentation of the executive secretary of the board while speaking at the NOG conference.

Speaking on the 10 strategies and action points, his team promised to work on to increase national capacity over a 5-year period at the same conference the previous year, Wabote showed that concrete efforts has been made actualise each of the items.

Expatiating on the success level achieved in the past one year, he stated that one of such was that the board promised to fast-track the establishment of five oil and gas parks.

"We have commenced site developments works on 2 of the parks in Bayelsa and Cross River States. Architectural and detailed engineering design works are ongoing for the parks in the Akwa-Ibom and Imo States. Land acquisition are in progress for the ones in Delta and Edo States," he stated.

Another key achievement highlighted was the launch of the $200million Nigerian Content Intervention Fund in partnership with Bank of Industry (BoI), in addition to the judges' workshop organised to enhance the role of the judiciary in the implementation of the NOGICD Act, as well as the various stakeholders' engagements on Ministerial Regulations, NCDF Remittances, and Commencement of Forensic Audit.

He submitted that the federal government has also been very supportive with the various executive orders aimed at sustaining and expanding the realm of local content practice in the country.

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