By Stanley Onyeka, Lagos
The Nigerian Content Development and Monitoring Board (NCDMB), on Thursday achieved a much-needed consensus among critical oil and gas industry stakeholders and manufacturers to ramp up in-country production and utilisation of line pipes in oil and gas operations.
This is part of the strategy to deepen local content, and conserve foreign exchange and create jobs.
The Oil Producers Trade Section (OPTS), comprising all international oil companies (IOCs), and the Independent Petroleum Producers Group (IPPG) met with leading pipe manufacturing companies and pipe coaters as well as the NNPC Upstream Investment Management Services (NUIMS) at the instance of the NCDMB to take stock of progress made since 2011.
The Executive Secretary, NCDMB, Felix Ogbe, at a one-day, “Stakeholders Workshop on Manufacturing of Line Pipes in Nigeria: Processes, Challenges, and Opportunities at the Nigerian Content Tower (NCT), Yenagoa, described it as “a major driver in oil and gas industry operations, as without line pipes you cannot evacuate products.”
He said the Nigerian Oil and Gas Industry Content Development (NOGICD) Act, 2010, envisages 100% in-country manufacture of line pipes (seamless and welded pipes) and that the Board, in conjunction with the OPTS, had agreed on an initiative in 2011 to work towards the attainment of that target.
He noted that a lot still has to be done and that status reports of projects would have to be presented and discussed at the workshop to determine appropriate measures by all stakeholders to intensify efforts to overcome teething problems, if any.
Mr. Ogbe, represented by the Director, Monitoring and Evaluation, Abdulmalik Halilu, disclosed that the Board introduced different policies in realisation of the potential of in-country manufacture of line pipes for retention of significant revenue and job creation, and remains determined to work with industry players for meaningful progress.
Also commenting, the Director, Capacity Building, NCDMB, Dr. Ama Ikuru, explained that the Board and the entire petroleum industry are focused on Made-in-Nigeria line pipes, because it is “the key to Nigeria’s industrial development and a critical requirement of the NOGICD Act, 2010, and the Presidential Executive Order on Local Content.”
This, he said, is also “central to the attainment of the 70% objective of NCDMB’s (Nigerian Content) 10-Year Strategic Road Map,” and would reduce costs and eliminate mark-up by middlemen.
Dr. Ikuru also noted that there are major oil discoveries across Africa as well as opportunities in Nigeria and other parts of the continent, supported by the African Continental Free Trade Area (AfCFTA).
Line pipe opportunities in Africa include the Trans-Saharan Gas Pipeline, African Renaissance Pipeline, and Transmed Gas Pipeline.
To support the local industry, he said the Board, among other things, introduced the Equipment Component Manufacturing Initiative (ECMI), and issued guidelines on it, which “birthed issuance of the Nigerian Content Equipment Certificate (NCEC).”
The NCEC scheme is designed to promote and enforce the utilisation of locally manufactured goods, services, and equipment in the oil and gas industry.
…the Board introduced different policies in realisation of the potential of in-country manufacture of line pipes for retention of significant revenue and job creation
Status reports
Key manufacturers presented status reports on their respective projects, including challenges and what should be main considerations.
The Managing Director, Brentex Petroleum Services Limited, Chidi Nzerem, disclosed that his company has made appreciable progress in developing an LSAW Line Pipe Mill in Calabar, Cross River State, but has faced difficulties in securing long-term funding from the banks after investing over $64 million. To take the project to completion stage, an additional $176 million would be required.
He said: “Nigeria sits on oil and gas and there must be commitment to manufacture line pipes” to eliminate capital flight through importation of pipes.
He assured that “within the next 36 months, line pipes will start rolling out from the mill if the required funds become available.”
For Frigate Pipe and Tubulars Limited, whose pipe mill has progressed without hiccups, the bulk of the manufacturing line has been acquired, and the facility installation would be completed within the next 24 months.
The Chief Financial Officer of the company, Bankole Olugbile, said industry demand for seamless line pipes in Nigeria is 120,000 metric tonnes per annum, which could be easily met, but noted that “projects like this require long-term cheap funding,” and called for incentives, such as pioneer status, among others, from the government.
From Yulong Steel Pipes Limited, a pioneer, which suspended production operations in Nigeria for five years after supply of 2,000 metric tonnes of line pipes to Dangote Refinery, Lekki, Lagos, but announced its reentry into the country.
Its representative declared that the company is looking forward to business from the Trans-Saharan Gas Pipeline and Shell Petroleum Development Company’s Bonga North, among others.
Pipe coating companies, including Solewant Group, Monarch Alloy, and Tenaris, also gave their respective status reports and highlighted what they expect from oil and gas industry operators.
The IOCs present affirmed that there are opportunities for Made-in-Nigeria line pipes and expressed keenness to do business with the local manufacturers.
Supply Chain Manager (Production and Logistics), Shell Petroleum Development Company, Mrs. Chioma Okpoechi, provided procurement data on line pipes from her company indicating that $43 million was spent between 2019 and 2014.
She said: “steadily our operational requirements are growing” and that $115 million is to be spent in the next four years.
Mrs. Okpoechi expressed hope that “this should encourage Made-in-Nigeria manufacturers,” although she cautioned that quality and timeliness of delivery cannot be compromised.
Assurances were also received from ExxonMobil, which urged local manufacturers to strive for cost competitiveness and ensuring that they understand what the oil and gas industry upstream needs. TotalEnergies also gave assurance of support for local manufacture.
Seplat Energy Plc, a leading independent operator, represented by its Nigerian Content Development Manager, Simeon Ogari, declared “We are 100% in support of Made-in-Nigeria line pipes,” especially as the company is “a product of local content.”
Another indigenous oil company, First Exploration & Production (First E&P), represented by its Project Manager, Soyemi Ayodeji, also pledged total support.
