Nigeria: Nestoil, Oilserve Secure $400m Gas Pipeline Construction deal

EPC-Construction

VENTURES AFRICA- Nigeria’s NestOil, an indigenous Engineering, Procurement and Construction (EPC) company and Oilserve have secured a $400 million contract, from the Federal Government of Nigeria, for the East-West evacuation gas pipeline project.

The project, which is part of a network of gas pipelines under construction around the country, is expected to boost the start-up of hundreds of new businesses, reduce the cost of doing business in the country by as much as 30 percent, and generate several jobs, within a few years.

According to BusinessDay, budgetary provision for the project has 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, which is split in two halves for both indigenous oil firms, was awarded in the spirit of local content development. Reports indicate that it is the first time local companies are handling a strategic project of this magnitude.

Construction of the gas pipeline is expected to last 24 months, the project is also expected to generate over 1,000 jobs.

Other major gas pipeline projects progressing steadily include 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 billion to build the pipelines.

Nigeria’s minister of Petroleum Resources, Diezani Alison–Madueke said in the last one year, the government has specifically invested close to $1 billion 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 Dangote’s Obajana cement and other potential industrial customers.

The minister further opined that the 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, when 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.

According to a source, the potential of investment opportunities that would be unleashed when the pipeline comes on stream would be enormous due to the reserves, market, and the infrastructure for the delivery of gas presently being articulated.

“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.