For Africa’s Gas Agenda, Infrastructure is Key, Oilserv Insists - Africa’s premier report on the oil, gas and energy landscape.

For Africa’s Gas Agenda, Infrastructure is Key, Oilserv Insists

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By Ahmed Gafar

Oilserv Limited, Nigeria’s top gas pipeline builder, has argued repeatedly for the full implementation of the country’s National Gas Master Plan (NGMP), first enunciated by the NNPC Ltd, the state hydrocarbon firm, in 2008.

Many aspects of the plan have struggled. The NGMP proposed three gas pipeline transmission systems, including a 1,200km north-south line, a 700km western system with 200km offshore extension and a 200km pipeline to interconnect the two. It asked gas producers to buy into some three large Central Processing Facilities (CPFs), each of them a 1 Billion standard cubic feet per day capacity plant, which will essentially become industrial parks.

Stacking Of The Akk Line Pipes

The Master Plan provides a pricing regime, mainly between gas producers and heavy users of gas, especially within the framework of the domestic gas obligation. But Oilserv has kept to the premise that the infrastructure to process the gas and move the molecules around the country must be in place, no matter the nature of conversation around pricing.

Now as Nigeria’s policy makers have constructed the energy transition in terms of rapid growth of natural gas utilization and coined the phrase “Decade of Gas: 2021-2030”, Oilserv says that the current government has picked up the slack.

“This current government in Nigeria has done quite a lot that they have not been given credit for”, declares Emeka Okwuosa, Oilserv Limited’s founder and Chief Executive. “I can tell you when President Buhari came into power, the AKK (Ajaokuta -Kaduna -Kano gas transmission line) was already under discussion since 2009, but never moved anywhere. Within two to three months of coming to power, he pushed it and said this must be done. And the government gave us support to navigate that process, especially the funding”.

“There’s a tender going on, on how to take most of the moribund distribution systems for petroleum products. We see them all over Nigeria, they are not functional. But we want to buy them over, rebuild them and make energy available, instead of having people transport petrol and diesel from Port Harcourt to Makurdi…

“The government has also been determined to have the Nigerian gas master plan fully executed because of the impact and that’s why we’re talking about the Qua Iboe Terminal (QIT) to Ajaokuta, which is the last leg.  There are also some programmes that the NNPC is midwifing, part of which are the seven gas programmes”.

Oilserv has been an integral part of the implementation of the country’s large, midstream gas infrastructure, both government led (NNPC) and private sector commissioned (Eg. Sanctioned by Shell, Oando Gas &Power, etc). “We have built more than 70% of all gas distribution systems in Nigeria”, Okwuosa says.

The company has announced the delivery of a significant percentage of its portion (which is 50%) of the AKK pipeline, a 40 inch by 614 kilometre gas line from the middle of the country to the far north. “We are executing 303 kilometres of the 40 inch line plus another 15 kilometre, 24 inch line to supply gas to the power plant that is envisaged to be built in Abuja. This is conceived by NNPC to move gas within Nigeria and achieve domestic Gas Utilization plants. Now, you have the western flank of it, which is the Escravos to Lagos pipeline, which is in existence. As we speak, there has been a second loop of 36 inch line, built”.

Oilserv was also involved in the east-west gas transmission facility OB3 (Oben to Obiafu-Obrikom), “which is the largest pipeline in terms of diameter- 48 inch diameter”, Okwuosa explains. The company was contracted to construct half of the 127 kilometre line. “Now we have commissioned our own portion of the line”, he says. OB3 was devised to move natural gas from the gas rich east of the country to the thriving gas market in the west. “You may wish to know that a lot of the gas that exists in Nigeria today lies between what we call south- south or south east”, he reiterates.

Stringing of Pipes along the Right of Way of the AKK Pipeline

“But utilization is all over Nigeria. The only way you can monetise this gas is to build the pipeline systems that will evacuate this gas. This interlink is important. Now we’re building AKK to Kano, but on the back of that is what actually will complete the South to North pipeline which is the Qua lboe – Cawthorne Channel / Alakiri and the Obigbo Gas Plant to OB3. The feed is from Obigbo load, then through Umuahia, Enugu and all the way to Ajaokuta. That feed is important and is already being conceptualized as we speak. As we finish AKK, that angle will come in and then that will make up the backbone of the Nigerian gas master plan. The rest will now be distribution lines or trunk lines that you want to take from maybe Zaria to Sokoto, Kano to Maiduguri and like we are planning to execute now within the southeast to move gas to Onitsha, Nnewi, Owerri, and all that. All those will be done and really there’s a lot to be done”, enthuses Okwuosa, a private sector businessman clearly excited to be connecting the dots in what is effectively a government mandated programme.

“Already Lagos is fed and like I mentioned, we (Oilserv) built the entire gas distribution systems in Lagos. There’s already another concept to move gas from the load in Shagamu to Ibadan (in the country’s southwest), Illorin, and then Jebba (towns in Nigeria’s North central). So all these form the gas distribution system. Nigeria needs gas to develop. And when we talk of energy transition, we have to transit from oil-based energy supply, which is crude oil itself and the constraints that come out of refining whether it’s for diesel, petrol or kerosene. You have to transit from that into gas first because gas is cleaner and is more available in Nigeria. And gas is not just available, it will last a long time of use in Nigeria.

Okwuosa believes, as many African leaders have proffered, that the move to natural gas prepares the ground for transition into renewables.

“We should go into renewables, but we should pay strong attention into gas distribution because that’s one thing that can change the face of Nigeria energy delivery system”.

Manual welding of the pipes on the AKK pipeline

He says that Oilserv has a transition stategy. “We sensitize it, and we review it regularly. Oilserv actually has six companies in the group. The Oilserv that is the flagship is the pipeline, Engineering and Construction Company, the EPC company, but that’s not all we do. We are into gas development right now. We’re working to build, own and of course operate gas networks. That means that we are also trying to address energy availability. Within our group, there’s an agricultural subsidiary and if you look at energy availability, as we speak today one of our companies is working closely with NNPC.

“There’s a tender going on, on how to take most of the moribund distribution systems for petroleum products. We see them all over Nigeria, they are not functional. But we want to buy them over, rebuild them and make energy available, instead of having people transport petrol and diesel from Port Harcourt to Makurdi, for example. It doesn’t make any sense because there’s a pipeline built many years ago, but really it’s not there anymore. It’s’ been damaged and it’s not being maintained. We are also addressing that.

“We’ve also gone into renewables. And we are not at this point developed in that. But we have a partnership with a German company to address the renewable sector, mostly about how we are able to utilize the principle of both green and blue hydrogen. We want to be able to generate power without having to damage the environment. We are already moving into that sector, but going into the new phase of energy delivery takes a lot of time to plan an investment”.

Okwuosa comes across as quite “understanding” of President Buhari’s challenges, but he takes the opportunity to speak up about the Nigerian investment risk, especially as it concerns the take-off of the renewable energy infrastructure.

“If you look at Nigeria, we also have some issues. In most countries in the world that have developed and are still developing this, there are frameworks to encourage this development by issue of tax rebate and pricing. You address the price issues, to make sure that the entry point in terms of costs for these alternatives will not be too high. Unfortunately, we don’t see any articulated situation like that in Nigeria”.

Railway haulage of the AKK Pipes: “We have built more than 70% of all gas distribution systems in Nigeria”, Okwuosa says.

Presently, he returns to natural gas, which, he keeps insisting, is at the heart of the African energy transition. “We get the gas right, then it’s easier for us to move into renewables. The Nigerian government has done a lot, but you know as a developing country, we are grappling with too many things. It’s about focusing on the right things that matter. But the point I’m making is, of course the Nigerian government has done a lot but they can do more. And what they can do more without going into specifics is basically to make it possible that environment should be encouraging for investment in renewables. If we do not deliberately do that, nobody will invest because you don’t invest to lose money. Investment is business. And it’s not government that should do that in terms of investing. Government should encourage the private sector to invest. That’s the key. Government built power plants about 20-30 years ago and realized that it’s not the way to go and sold them, because government is not best suited to run business. They can only encourage businesses. The renewable energy sector requires to be encouraged. I may not be able to give you specifics because I don’t have one now. The reason is that there are many factors out there that you have to consider. But what is important is there is a huge amount of gap between the energy we need and energy we have today and it’s massive. And the way to bridge it is to quickly scale off energy availability with gas and slowly keep transitioning to renewables over time. But if we do not do a deliberate action on it, then we will be caught in the middle where we have our oil and gas and we may not be able to produce it because there’ll be no finance to do it”.

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