Nigeria: Delivering AKK Gas Pipeline

7 July 2020

Having successfully delivered the construction of the Obiafu-Obrikom-Oben Gas Pipeline, Oilserv Limited has moved to the Ajaokuta-Kaduna-Kano Gas Pipeline where it is handling the Engineering, Procurement and Construction of the first 303kilometer portion of the 614kilometer gas infrastructure project.

Last Tuesday, the flag-off the construction of the $2.8billion 614kilometers Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline, a major infrastructure project critical to Nigeria's economic development, was done virtually by President Muhammadu Buhari.

The flag off the project has put to rest the apprehension and skepticism among Nigerians about the seriousness or otherwise of the government over the project.

In carrying out the ceremony, President Buhari directed the Minister of State for Petroleum Resources and Group Managing Director (GMD) of NNPC to authorise the Engineering, Procurement and Construction (EPC) consortiums to commence construction operations at the project camp sites without further delay.

"We promised the nation that we will expand the key critical gas infrastructure in the country to promote the use of gas for the domestic market.

"These include the Escravos to Lagos Pipeline System - 2 (ELPS-2), Obiafu to Obrikom (OB3) pipeline and the AKK.

"I therefore directed NNPC to ensure that these critical projects are completed on time, within budget and specification," Buhari stated.

According to the president, when completed, the AKK Gas Pipeline Project would provide gas for generation of power and for gas-based industries which would facilitate the development of new industries and also the revival of moribund industries along transit towns in Kogi State, Abuja (FCT), Niger, Kaduna and Kano states.

"This will ultimately create numerous direct and indirect employment opportunities while fostering the development and utilisation of local skills and manpower, technology transfer and promotion of local manufacturing.

"The project is therefore part of the delivery of our Next Level Agenda for sustainable development and enhancement of the economic prosperity of our Country," Buhari added.

Policy Focus

The AKK Gas Pipeline which was conceived as part of the Nigerian Gas Masterplan (NGMP) by previous administrations has remained in the policy shelf for nearly a decade. Its implementation by the present administration is a progression from the delivery of the Obiafu-Obrikom-Oben (OB3) gas grid development.

The AKK project was designed to enlarge the domestic gas market by using the energy demand from the northern parts of the country to enhance the commerciality of domestic market play and confer viability on investments in government's gas commercialisation agenda.

According to the Nigerian National Petroleum Corporation (NNPC), the gas commercialisation programme was meant to leverage on the nation's huge natural gas reserve base to stimulate growth and enable Nigeria's migration from the current mono-economy into a diversified economy.

The AKK project would enable the injection of 2.2 billion standard cubic feet of gas per day (bscf/d) into the domestic market upon completion, and facilitate additional power generation capacity of 3,600 megawatts (MW), the corporation said.

The 614 kilometer pipeline is expected to trigger economic activities that would ultimately deliver on national economic aspirations in the petroleum industry through which the government intends to position the country's abundant natural gas reserves as the key enabler for economic diversification.

Processes in realising the policy targets include clearly mapped out strategies to deepen the domestic gas market, end gas flaring at oil production sites, enhance national revenue through natural gas commercialisation, boost the Nigerian Content in the petroleum industry, and build sustainable energy infrastructure for the domestic economy.

According to the project profile from the NNPC, the $2.592 billion AKK pipeline project would provide channel for the upstream and midstream petroleum industry operators to deliver their natural gas output into the grid and spur industrial evolution along the new pipeline corridors in northern Nigeria.

Powering Economic Activity

Energy is considered most critical among all factors of production, and acute shortage of energy has been the major bane of industrial and commercial enterprises in the country.

Thus the AKK pipeline is therefore considered a key factor in sustainably resolving issues of industrial energy for the present and future generation of Nigeria.

Manufacturing capacity in Nigeria today is highly constrained by energy issues. Running manufacturing by liquid fuel is far too expensive and unprofitable; power supply for industrial activity is grossly inadequate.

So the AKK pipeline holds potential to feed power plants with adequate fuel energy to generate adequate electricity for homes and businesses.

Lack of adequate gas transport infrastructure has been a major problem in Nigeria. The crisis in nation's power sector is partly caused by lack of gas supply to power plants.

By sending about 3,600MW of power to the grid, this gas infrastructure will help greatly in solving the electricity challenges associated to gas supply.

The pipeline can also directly feed industry and commerce with cleaner, cheaper gas energy. In both ways the AKK pipeline is going to enable the industrial sector of the economy optimize its potentials for growth, job creation and contribution to gross domestic product (GDP).

Before now, members of the Organised Private Sector (OPS) of the Nigerian economy and policy analysts like the Manufacturers Association of Nigeria (MAN), had consistently called on government to provide critical infrastructure to boost economic activities and attract massive investment in the country.

Such concerned business people and believe that the best response government has given to the agitation from the business community is to provide hope for production infrastructure that would make the country more attractive for investment.

To this end, the AKK pipeline when realised would be a sustainable infrastructure that would enhance the operating environment for business in the country. The facility would also remain central to all aspects of Nigeria's industrial development including boosting power generation, stimulating manufacturing activities and de-constraining new field development in the oil industry.

In the upstream sector of the petroleum industry, the AKK pipeline will enable more oil production by helping operators to meet the condition of zero flare development plans. So, operators who have been held down by market limited destination for associated gas are now provided space in the AKK pipeline.

Again, expanding the domestic gas market with the AKK pipeline will boost investor confidence in the government's flare gas commercialisation programme by providing ready offtake channel for harnessed gas. This strongly propels Nigeria's drive to attain zero emission at oil production sites and probably enable the country exit the inglorious global greenhouse emission chart.

Furthermore, the AKK gas pipeline would also lead to economic advantage for the country by earning direct income for government and also helping develop indigenous industrial capacity by providing cheaper, cleaner and more sustainable energy.

It would become a consistent revenue earner for all stakeholders including the government by operating a tariff based gas transmission services to assist producers wheel gas to market.

It would also entitle government to tax income, equity dividend and direct market returns on volume gas sales.

Nigerian Content

However, the biggest value is that the AKK pipeline is a testament to government's commitment to the Nigerian Content Policy. Apart from the funding arrangement which brought the Chinese content in the project, major scope of the project is being delivered by indigenous Oilserv consortium which delivered more challenging Obiafu-Obrikom-Oben (OB3) pipeline on which the AKK pipeline is anchored.

More importantly, the involvement of Oilserv makes the project more realistic as the pipeline major comes to the project with its trademark competence, capability and integrity which had seen it handle without fault, numerous projects in the country.

The reliance on local expertise also makes the infrastructure more sustainable and cheaper in terms of long term maintenance plan.

With the Oilserv consortium, government would not suffer maintenance hitches similar to the impasse that plague the local refineries following the refusal of original builders to honour maintenance commitments.

It is therefore taken for granted that the Oilserv consortium would regularly be on ground to guarantee the integrity of the pipeline.

Chairman of Oilserv Group, Mr. Emeka Okwuosa, said the consortium led by his company was working in concert to provide best-in-class EPC services for NNPC and Nigeria in consonance with the company's track record of delivering world class pipeline construction even most challenging terrains.

"Oilserv is a 100 percent indigenous company currently employing more than 600 staff. With this AKK we probably will go to between 1,500 and 2,000 at the peak of the personnel matrix. But the fact remains that we are ready. This is not the first project. We are commissioning the OB3 gas project which is slightly larger than this in terms of diameter.

"The OB3 is 48 inches in diameter. So we have the experience, we have the personnel, we have the equipment and we are capable and we would deliver this project," he said.

On the projects potential for job creation, Okwuosa declared that the company would significantly increase its workforce during the project's time frame, adding that additional staff would be recruited from communities that host the project.

"Like I said, we will crank up our employment by more than 1,000 and major part of this 1,000 will be indigenes of the areas where we are. We have a clear programme to develop the areas where we build pipelines."

In advancing Oilserv's performance profile in petroleum industry pipeline delivery, Okwuosa declared that the consortium is conversant with driving through tough and challenging terrains.

"Every project has come with its challenges. There are challenges in driving a project like this in virgin forests, to go through rivers, to go through rocks, to deal with security issues.

"These are challenges but I don't have fears because we have the knowledge and the experience to deal with it. We are very ready to deliver the project and deliver the project on time."

Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), Mallam Mele Kyari, expressed his confidence in the ability of the selected contractors (led by Oilserv) to deliver the project, saying, "We are confident that the EPC contractors will deliver the project on time, within budget and to quality specifications," he declared.

Kyari stated that "The current administration under the leadership of President Buhari has made it a priority to ensure revenues from oil and gas resources are utilized to support the emergence and growth of other non-oil sectors of the economy," stressing that the pipeline is one of the economic diversification efforts of the government.

The consortium is to deliver the first phase of the 40 inch diameter pipeline which would run from Ajaokuta in Kogi State to KP303 between Abuja and Kaduna and also to deliver a Terminal Gas Station (TGS) which is a 24 inch 15 kilometer spur line to a planned power station in Abuja.

To enable the state benefit from the gains of the project right from the construction stage, Kogi State Governor, Yahaya Bello, said the youth of the state had been trained on technical skills and made ready for absorption in the construction stages of the project.

As currently planned, the AKK pipeline project is envisaged to be completed by 2023.

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