NNPC, Consortiums Sign Contract to Build $2.8bn Ajaokuta-Kano Gas Line

 By Chineme Okafor in Abuja

The Nigerian National Petroleum Corporation (NNPC) yesterday disclosed that it had signed the engineering; procurement; construction; commissioning and financing agreements for Lots 1 and 3 of the 40 inches by 614 kilometres long Ajaokuta-Kaduna-Kano (AKK) gas pipeline and stations with a consortium comprising of Nigerian and Chinese companies.

It stated that the agreements signed were for a 100 per cent contractor financing model for the project which is expected to cost $2.8 billion to build.

A statement from the Group General Manager, Public Affairs of the NNPC, Mr. Ndu Ughamadu, in Abuja, stated that under the terms of the contract, Lot 1 with total length of 40 inches by 200 kilometres, stretching from Ajaokuta to Abuja terminal gas station was awarded to a consortium formed by OilServe and Oando Plc.

It explained that Lot 3 which runs from Kaduna terminal gas station all the way to Kano terminal gas station with a total length of 40 inches by 221 kilometres was awarded to the Brentex/China Petroleum Pipeline Bureau (CPP) Consortium.

NNPC stated that it envisaged that the contract agreement for Lot 2 which covers 40 inches by 193 kilometres, and stretching from Abuja to Kaduna would be executed in the weeks ahead.

The statement quoted its Group Managing Director, Dr. Maikanti Baru, to have said at the contract signing ceremony that the AKK gas pipeline was a section of the Trans-Nigerian Gas Pipeline under the gas infrastructure blueprint designed to enable the industrialisation of the eastern and northern parts of Nigeria. 

The project, Baru noted, would also enable connectivity between the east, west and north, which is currently non-existent. 

He stated that the AKK section had suffered setbacks due to scarce resources for government to fully finance the project, hence the adoption of the contractor financing model.

According to him: “The two other pipelines, the OB3 and ELPs 2 in the gas master plan blueprint, are currently at various stages of completion and are being financed directly by the federal government.”

Similarly, the statement quoted Mr. Emeka Okwuosa, Chairman of Oilserve Limited, to have on behalf of the Oilserve/Oando Consortium, expressed gratitude to the government and NNPC for providing the opportunities for indigenous companies to flourish in the oil sector.

Okwuosa reportedly said the decision to award Lot 1 of the AKK project to an indigenous consortium spoke volume of government’s resolve to grow and encourage the attainment of the ideals of the country’s local content law.

Also, for the Brentex-CPP Consortium, Mr. Abubakar Nuhu, who is the Vice- Chairman of Brentex Nigeria Limited, reportedly said that the consortium would rely mainly on the acclaimed pedigree and global expertise of CPP in pipeline construction to deliver a world class project.

NNPC explained that the process for the award of the AKK project started in July 2013t, with the advertisement for tenders published by it in major national newspapers.

It added that after a painstaking technical and commercial evaluation process, the Federal Executive Council (FEC) on December 13, 2017 approved the contract valued at over $2.8 billion.

Meanwhile, the Department of Petroleum Resources (DPR) has given the nod for the commencement of construction of the 12 million standard cubic feet per day (mmscf/d) capacity Liquefied Petroleum Gas (LPG) extraction plant at Ikuru area of Rivers State, by Green Energy International Ltd.

Green Energy is the Operator of the Otakikpo marginal field in Oil Mining License (OML) 11. It stated that the DPR’s approval to construct (ATC) for the 12mmscf/d capacity LPG extraction plant was issued to it following its successful submission of the detailed engineering design of the plant which licence to establish (LTE) was issued in 2017.

According to the Director Legal and Corporate Matters of Green Energy, Mr. Olusegun Ilori, the engineering design was produced under supervision of the indigenous operator by the contractors – PCC-LAMBDA Consortium, formed between Nigeria indigenous companies and a Chinese company -Peiyang Chemical Equipment Co. Ltd (PCC).

Ilori noted that PCC was the original equipment manufacturer (OEM) for the plant, and would be responsible for manufacturing and design activities associated with the project.

He stated that the company which began oil production in February 2017, was determined to ensure full utilisation of the gas produced from the field for LPG and power generation amongst other projects. 

According to him: “The gas utilisation plant involves the use of the lean gas to power the 12o megawatts (MW) gas generator at Otakikpo field out of which 5MW would be dedicated to the host communities in line with its MoU with the government while the LPG and propane would be bottled and sold. 

“Part of the LPG shall be for domestic use within Otakikpo communities in order to support small scale industries to stimulate the economy of the Niger Delta.”

Ilori further said: “The company appreciates the support of the DPR in ensuring prompt approval as it serves as booster for the company’s effort to fulfill its obligations as a pilot project approved by government for zero gas flares operation in the Niger Delta.

“The LPG plant which is expected to be completed within the 12 months schedule would be a booster for Nigeria’s drive toward utilisation of gas resources for domestic gas. The company recently delivered 6MW gas generator to the community while the other batches will arrive in the year.”