The arrival of the Egina Floating Production Storage and Offloading (FPSO) vessel at Ladol Free Trade Zone (FTZ) has boosted local content drive of Federal Government, according to industry’s stakeholders.
The Egina FPSO is a newly built spread moored FPSO (L330m x W61mx D33.5m dimensions) connected through a subsea production system to 44 wells (21 oil producers and 23 water injectors) via umbilicals, flow lines and risers.
The Egina oil field project is located in Oil Mining Lease (OML) Block 130 and is to be operated by Total Upstream Nigeria Limited (TUPNI), holding 24 per cent stake and supported by three other partners, China National Offshore Oil Company (CNOOC), 45 per cent; Petrobras, 16 per cent, and Sapetro,15 per cent.
The FPSO comprises oil and gas processing and water treatment facilities with an oil storage capacity of 2.3 million barrels. Oil export will be through single point mooring buoy plus back up facilities for tandem offloading. Gas export will be through the existing Akpo-Amenam pipeline.
The Egina oil field project expected to be completed in Q4 2018, is to add 200,000 barrels of oil per day to the production of the country, about 10 per cent of Nigeria’s current total capacity. This will significantly increase the income accruing to the Nigerian economy. In addition, the facility will provide employment to several indigenous professional engineers and skilled and semi-skilled personnel.
According to the Nigerian National Petroleum Corporation (NNPC), which is a Joint Venture (JV) partner of TUPNI, the Egina oil field, upon commencement of operation, will bring down oil production cost to $20 per barrel from its current cost of about $30 or more.
Boosting FG’s Local Content Drive
The integration of the six locally fabricated topside modules at the SHI-MCI Yard before its final sail-away to the Egina field is a game changer as far as the execution of deep offshore oil and gas projects in the country is concerned. It is also a remarkable achievement in local content development in Nigeria.
Being the first project to be launched after the enactment of the Nigerian Oil and Gas Industry Content Development Act in 2010, Egina is advancing Nigerian content to record levels and has by far the highest quantum of local content completed for any oil and gas project in Nigeria, but also for Total’s projects worldwide.
Over 24 million man-hours would have been spent in-country at the end of the project phase; this translates into direct employment for a large number of skilled and semi-skilled personnel, as well as in-direct employment for many more.
Egina has enhanced the capacity of local contractors by providing significant parts of the local content scope on the project to local contractors through the Egina main contractors. The project has brought in many first-of-its-kind developments to the oil and gas project infrastructure available in the country.
The newly built SHI-MCI Yard at Ladol with its 500m long FPSO integration quay is the first FPSO fabrication and integration facility on the African continent.
Besides, several other facilities were upgraded or expanded for the purpose of Egina project, like the GIL Automation facility in Ikeja where several components of the ICSS system were fabricated and assembled and in Port Harcourt area, the Aveon Offshore yard where the subsea manifolds were built, SCNL yard of Saipem with its unique quad-joint plant and FMC yard with facilities for the full assembly of Christmas trees.
All these investments for the creation of new facilities or upgrade/expansion of existing ones will now benefit the local industry to cope with new projects in the future.
Other yards including Nigerdock, Dorman Long, EWT, PCNL and Ponticelli were also assigned significant parts of the local content scope on the project but also many local suppliers for the provision of various components of the project.
Senate Committee Commends Total
The Chairman, Senate Committee on Local Content, Senator Solomon Adeola, during the committee’s oversight function in Lagos to inspect the Egina FPSO, commended Total for the project over the huge investment on the project.
According to him, it is a huge investment by private investor and Nigeria Government was indeed commendable. The 330-metres long Egina FPSO is the largest FPSO ever installed in Nigeria.
“This is a wonderful investment coming to us as a nation with a production sharing contracts between Total, other investors and Federal Government of Nigeria. If Nigeria can attract such huge project estimated at $16.3billion, it shows we are moving in a right direction and growing our economy,” he said.
Adeola said that this is the first project executed after the passage of the Nigerian Local Content Act which is an indication that local content development has come to stay in Nigeria, adding that real local content growth was about domiciliation and domestication of capacity in-country.
How we achieved over 50% local content in Egina project – NCDMB
Nigerian Content achievement recorded on the Total Upstream Egina deepwater project exceeded 50 per cent, according to the Executive Secretary, Nigerian Content Development and Monitoring Board (NCDMB), Engr. Simbi Wabote.
He said the Board set out to achieve 60 per cent Nigerian Content on the project but realized over 50 per cent, which he described as commendable because the execution of Egina set new benchmarks and domiciled new capacities and facilities in-country, one of which is the FPSO integration facility at the SHI-MCI yard located at the LADOL Free Zone, Lagos.
Speaking further, the Executive Secretary clarified that crude oil production which is the main stay of the Nigerian economy might be shut down if the NCDMB were to enforce full implementation of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act.
He stressed that some targets set in the Act were aspirational and not attainable at the moment because of limitations in capacity and technology.
He cited an example with Section 53 of the NOGICD Act which mandates that all fabrication and welding activities must be carried out in Nigeria, yet there are no dock yards in-country where the hull of big vessels such as the Egina FPSO can be fabricated from scratch.
According to Wabote, “If we are to implement the Nigerian Content Law 100 percent, we will have to stop oil production in Nigeria, develop non-existing capacity, then start production again. The Board enforces the law with pragmatism. Ninety-five percent of our construction in the oil industry is steel, yet we do not have a steel mill in Nigeria. The oil and gas industry depends on sectoral linkages to deliver on some items. Moreso, Local Content is a marathon race and not a sprint.”
On why the Board granted some waivers for the importation of certain equipment used on the Egina project, Wabote explained that some equipment used in the oil and gas industry were proprietary, like the Christmas Tree, while some raw materials were not available in Nigeria.
“In such instances, the operator or contractor would request the Board for permission to import. When we give such waivers, we also mandate the companies to execute Capacity Development Initiatives (CDI) to close the capacity gaps,” he said.
He explained that before a vendor would receive a waiver to procure items from abroad, it must show evidence that it is fully established in-country, employs Nigerians, and has made investments.
He admitted that a number of contractors contravened the Nigerian Content Act during the execution of the Egina project, noting that such vendors were sanctioned by the Board.
The NCDMB boss also canvassed for the amendment of Section 68 of Nigerian Content the Act which provides that contractors that violate the Act could only be punished after conviction in the law court.
He also sought the support of the National Assembly to compel government owned oil and gas companies patronise facilities that have established capacities in-country.
Reactions by industry stakeholders
Managing Director of Nigerian Ports Authority (NPA), Ms Hadiza Bala Usman, said that this was the first time NPA, and by extension, Nigeria, would be handling any vessel of this size.
“We recognise that the magnitude of this project presented the NPA with the opportunity to once again showcase our unrelenting effort at building capacity to meet the needs of customers across board. We are grateful for this unique partnership and look forward to more of such.
“This project puts a demand on NPA to facilitate the berthing of Egina for the completion of its construction at Lagos Harbour.
It also furthers the Federal Government’s local content policy with multiplier effects evident in employment opportunities, capacity building, technology transfer, cost saving, reduction in capital flight as well as the attraction of oil and gas hub to Nigeria for the sub-region,” she said.
The Group General Manager, NAPIMS, Mr. Roland Ewubare, stated that about 30 to 40 per cent of the Egina FPSO project had involved Nigerian content driven by NCDMB.
He assured that NNPC and NCDMB are aligned on the strategy and vision for local content, which he described as the only way to sustain the nation’s economy.
“The rational government policy has to be additional local content. NNPC and NAPIMS will support the NCDMB fully in fulfilling that mission,” he added.
Managing Director, TUPNI, Mr. Nicholas Terraz, reiterated efforts of the collaborative efforts of government agencies, saying none of this would have been possible without the support of partners and key stakeholders.
“And for this, I wish to extend the profound appreciation of Total to NPA, the Department of Petroleum Resources (DPR), NNPC, NCDMB, NAPIMS and our partners, CNOOC, Sapetro, Petrobras.
I also wish to thank the Nigerian authorities that have been involved in ensuring a safe and secure passage for the FPSO. I must thank, in particular, the Nigerian Navy, the Nigerian Immigration Service, the Nigerian Customs Service (NCS) and the Nigerian Maritime Administration and Safety Agency (NIMASA),’’ he stated.
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