In its efforts aimed at maximising local content, advancing employment opportunities as well as patronising competent Nigerian contractors to provide technical and non-technical services and support that would contribute to national economic development and that of stakeholders, clients, companies, employees and contractors in the country, the Federal Government has set a minimum local content target of 75 per cent in 2010 for all works and contracts to be undertaken in or on behalf of all companies operating in the Nigerian oil and gas industry.
To meet this target, a number of processes, including contract evaluation and award criteria which favour bids that meet or exceed the minimum local content target are supported by the oil and gas companies operating in Nigeria.
The Federal Government, through the Nigerian Content Development and Monitoring Board (NCDMB) was established by the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, which came into effect on April 22, 2010. The Act enacted by the National Assembly of the Federal Republic of Nigeria stipulates that: Nigerian independent operators shall be given first consideration in the award of oil blocks, oil field licences, oil lifting licences and in all projects for which contract is to be awarded in the Nigerian oil and gas industry; There shall be exclusive consideration to Nigerian indigenous service companies which demonstrate ownership of equipment, Nigerian personnel and capacity to execute such work to bid on land and swamp operating areas of the Nigerian oil and gas industry for contracts and services; and Compliance with the promotion of Nigerian content development shall be a major criterion for award of licences, permits and any other interest in bidding for Oil exploration, production, transportation and development or any other operations in Nigerian Oil and Gas industry among others.
In October last year, the Board of Directors of NLNG approved the Final Investment Decision (FID), on the company’s Train-7 project. The implication of which was that the management of the company could proceed with delivering the project, which had been stalled for 10 years as the management awaited board approval to carry on with the project.
NLNG’s Managing Director and Chief Executive Officer, Mr Tony Attah, disclosed news of the board’s approval in Abuja, saying: “I am delighted to thank the board members for approving that the executive management can go straight ahead and work towards delivering the Final Investment Decision for Train-7 Plus. This is a dream come true for us.”
NLNG, rated as one of the top three gas exporters in the world, was the fastest growing LNG company in the world between 2000 and 2006. The company sought $7 billion from the global financial markets for the sustainability of its operations and expansion project which would increase its production capacity from 22 Million Tonnes Per Annum (MTPA) to 30 MTPA. NLNG is a private limited liability company owned by the Federal Government of Nigeria, represented by NNPC with 49 per cent; Shell Gas B.V. with 25.6 per cent; Total GazElectricite Holdings France with 15 per cent and Eni International with 10.4 per cent.
At a ceremony in London to commemorate the repayment of a $5.45 billion shareholder loan for its existing trains, Mr Tony Attah, disclosed that funds being sought would cover the company’s expansion programme (construction of Train-7) and investment in the upstream gas sector in Nigeria that will ensure the sustainability of feed gas supply to its existing trains (Trains 1 to 6) and the new Train-7.”
According to Mr Attah “Every 18 months, we brought up a new train until we got to Train 6 in 2007. So, for 10 years, we have not brought up any train. With six trains currently operational, the entire NLNG complex on Bonny Island, Rivers State, was capable of producing 22 million tonnes per annum of liquified natural gas, LNG and 5 MTPA of natural gas liquids, NGLs, from 3.5 billion (standard) cubic feet of natural gas intake. The coming on stream of Train 7 is undoubtedly a watershed moment for the NLNG and Nigeria,” he said.
He had assured then, that within the next 18 months, partners in the NLNG Train-7 project should take the Final Investment Decision (FID) to enable commencement of the project. NLNG has been adjudged as one of Nigeria’s most successful corporate organisations.
Explaining further, Attah said: “Let’s get this very clear, NLNG is a mid-stream company that has monetised over 5.96 Trillion cubic feet (Tcf) of Associated Gas (AG) which would have otherwise been flared, thus helping to build a better Nigeria. However, what we are doing is not just looking to fund the expansion of the plant but also to ensure sustainability of feed gas supply to the plant, for the continued success of NLNG. All of these align with our belief that gas is a catalyst for industrial and economic transformation which will position Nigeria to become a leading gas producing country.”
Interestingly, after years of delay, shareholders of the NLNG, NNPC, Shell, Total and Eni, last year, in London, signed the front-end engineering design contract for the much awaited NLNG Train-7 project, an indication that the company was inching closer to realising its expansion goals of increasing LNG production from 22 million tonnes per annum (MTPA) to 30 MTPA.
Commenting, the Group Managing Director, NNPC, Dr Maikanti Baru said: “As a 49 per cent shareholder in the NLNG, the corporation had immensely contributed to the success of the company over the years, supporting equity participation and contribution to shareholders loan. Through critical interface with relevant government agencies, we have played a pivotal role in the actualisation of Trains 1 to 6. Given the success of T1-T6, the NNPC is therefore fully committed and aligned with the government aspirations to replicate the success of this project. Therefore, our current focus is to kick-start T7,” he said.
Consequently, the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Mr Simbi Wabote, while speaking at a public workshop to discuss opportunities for the Nigerian content aspect of the NLNG Train-7 plant, in Abuja, recently, said the planned $7 billion NLNG Limited Train-7 plant would be done in-country by mostly Nigerian companies.
He said the Engineering, Procurement and Construction (EPC) work must be done in Nigeria, as part of effort to ensure local content drive in the country. He said the era of building such big projects in modules abroad and then shipped to Nigeria to be coupled, was over.
He explained the government would now assess such new projects with what had been achieved with the Egina Floating Production Storage and Offloading (FPSO) oil platform built by Total.
“I know how we insist on some of these local content requirements (from the international oil companies (IOCs). If you leave them alone, they will build this Train 7 in modules and then ship them from England or Netherlands and then take them straight to Bonny and couple them.”
In view of the above, it is obvious that Nigeria has the capacity and confidence to execute and deliver the NLNG Train-7 plant, unlike some other oil and gas projects which have been in the pipeline for many years. The project, if done in the country, will provide opportunities for in-country fabrication of pressure vessels, pipes and flare stack among others. It will also help the procurement of earth moving and materials, such as cement, fuel, lubricants as well as consulting services, installation, commissioning and inspection, testing and certification, among others.
Nigerian companies could also take advantage of opportunities to supply logistics, including marine and air transport for thousands of workers that would be engaged when construction of the new train begins will help Nigerian businesses and also contribute positively on our economy.
