NestOil, Oilserve win deal to build $400m gas pipeline

Friday, 25 May 2012 00:00 Olusola Bello

NestOil and Oilserve, two indigenous companies have been awarded the $400 million East-West

evacuation gas pipeline project by the Federal Government.

This project is part of a network of gas pipelines underway around the country, expected to bring

about the springing up of hundreds of new businesses, reduce the cost of doing business in the

country by as much as 30 percent, and generate many thousands of jobs, within a few years.

BusinnesDay investigation reveals that budgetary provision for the project has already been

approved. The project is estimated to cost $700million when completed.

The East West gas pipeline is about 120km x 48inches and will pass from Ob/Ob-Oben .

The contract is split into two equal parts for the two companies. This is the first time a project so

large and strategic is being handled by indigenous companies. It is understood that the contract was

awarded in the spirit of local content development. The construction would last for 24 months and is

expected to generate over 1,000 jobs in the two years that it will last.

The NNPC/Total JV pipeline from Ubefan to Imo River via Obigbo, was recently awarded the 120km x

48inch Ob/Ob-Oben East West gas pipeline contract.

Other major gas pipeline projects that are on-going and progressing steadily, are the doubling of

capacity to Two billion Cubic Feet / per day of the Escravos Lagos Pipeline System( ELPS) from

Oben-Ore-Lagos, through the 320km x 36inch pipeline construction, NNPC/Total JV pipeline from

Ubefan to Imo River via Obigbo.

The idea to construct the pipeline to provide the much needed gas for the power industry and other

sectors has been on the drawing board for several years. It is estimated that the country will need

about $4 billon to build the pipelines.

A source told BusinessDay that the things that could encourage investors to put down their money is

that the government must give assurance that the price is right for transmission.

There certainly are a lot of investment opportunities that would be generated with the pipeline by

the time it comes on stream. This is because the reserves are there, market is there, while the

infrastructure for the delivery of gas is being articulated and is progressing, a source said.

When you create a 1.6 million crude barrel equivalent a day, clearly there are huge opportunities

for both big and small players. About 2,500 kilometres of pipelines are going to be laid. The entire

value chain around the pipeline is open for business opportunities. Everything around pipeline

infrastructure is huge opportunities, he said.

The minister of Petroleum Resources , Diezani Alison Madueke said ``Specifically in the last one

year, the government has invested close to $1bn in almost 1,000km of gas pipeline development,

adding that the 136km x 36inch permanent gas pipeline from Oben to Geregu has been completed,

creating a major sharp artery to the Geregu Independent Power Plants, and will feed Dangotes

Obajana cement and other potential industrial customers. She further said that this line would

provide arterial supply to the North once the Ajaokuta-Kano line is completed.

She added that two other critical pipelines that will be concluded shortly are the Itoki-Olorunshogo

31km x 24inch gas pipeline and the 104km x 24inch Escravos-Warri gas pipeline expansion.

According to her, by the time the two pipelines are completed in the next few months, they will

create a permanent solution to the challenge of gas supply to the PHCN and NIPP power plants at

Olorunshogo, as well as supply to Ewekoro, Abeokuta and environs, for industrial capacity growth

and double the existing transmission capacity to 600 mmcf/d and immediately add about 80mmcf/d

additional gas supply to the grid from Escravos.

KAZTEC to Construct 30-inch, 58-kilometre loop line from the Ogale manifold to

Bonny Terminal for SPDC

Kaztec Engineering Ltd, KEL, a member of the Chrome Group, has won a $84.5 million for

the engineering procurement and construction, EPC contract of Shell Nigeria Exploration and

Production Company, SNEPCos Trans-Niger Pipeline, TNP.

The signing of the contractual agreements for the project, which took place at the SPDC

Office, Port Harcourt, Rivers State, is valid for one year, according to a statement from the

company.

The General Manager, Offshore and Shallow Water Projects, Mr Toyin Olagunju, and the

Contracting and Procurement Lead Pipeline Projects, Mrs Chioma Ogunuka, signed for

SNEPCo, while the Executive Chairman, Mr Emeka Offor, and the Chief Operating Officer,

COO, Mr Ikechukwu Okpala, signed for Kaztec.

The statement also said that this is the first major pipeline project to be executed by Kaztec

for Shell, saying: The objective of the project is to construct a 30-inch, 58-kilometre loop line from the Ogale manifold to Bonny Terminal, in the South-South region of Nigeria.

SNEPCO had been experiencing challenges with the current Trans-Niger Project.

It added that SNEPCO and the National Petroleum Investment Management Services,

NAPIMS, consider the project as an emergency, which was why it was divided into three

phases

The statement said Kaztec Engineering is to undertake the first package of the contract, for

which it was chosen based on the strength of its recent track record of project delivery in the

oil and gas sector.

Speaking, Offor assured SNEPCO of his companys commitment to deliver on, and even surpass all expectations from the project. He expressed delight for Kaztec joining the Shell

family, and looked forward to a productive partnership in the years to come.

Okpala also reassured SNEPCO of KELs delivery of the project on time and of good quality, as a taste of the KAZTEC Magic.

Speaking on behalf of SNEPCo, Olagunju, said that he looked forward to the successful

completion of the project, and called for world-class performance in all aspects of the project.

He urged for particular attention on safety and environment with a zero-incident execution of

the project.

- See more at: http://www.vanguardngr.com/2013/07/kaztec-shell-sign-84-5m-pipeline-

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