Nigeria sees local content prospects at SCC pipe mill

Following the signing of the Nigerian Oil and Gas Industry Content Act in 2010, the Federal government issued a set of medium term targets to guide the Nigerian Content Development & Monitoring Board (NCDMB) on implementation priorities.

These targets covered in-country spend, capacity building, employment generation, indigenous ownership of marine vessels, community enlightenment and participation, but one of the cardinal mandates is the establishment of 3 to 4 modern pipe mills in Nigeria to service the oil and gas industry.

The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke had explained that motive for the mandate was the conviction that upcoming industry projects, especially related to field development, Gas Master Plan and Gas Revolution provide adequate pedestals on which investments in new local pipe mills could be based.

Beyond this, she added, is the fact that over 10,000 direct and indirect jobs, 3000 training opportunities per annum and hundreds of suppliers the policy will spawn brings immense benefits to all stakeholders.

Therefore, at a recent visit to the SCC Pipe Mill at the outskirts of the Federal Capital Territory, Abuja, the Minister could not hide her joy at the hi-tech pipe-making process going on at the place. She noted that she was “very pleased to be part of this high-level industry team visiting SCC where a cumulative order from Shell, Chevron and Agip totaling over 100km of large diameter steel pipe is being manufactured for use in the Nigerian Oil and Gas industry.”

The vigorous implementation National Content and the high level of collaboration with the NCDMB by stakeholders, and general adherence to the guidelines issued by the board has led to success related to Domiciliation of Equipment Component Manufacturing, Expatriate Quota management, Utilization of Indigenous Marine Vessels, Indigenous Rig Ownership Scheme and other capacity development interventions of the Board.

More remarkably, the industry in less than 20 months is witnessing positive results from these NCDMB interventions, growing interest of OEMs and investors to set up facilities in Nigeria, the rising market share of indigenous vessel owners which had risen from less than $200 million in 2009 to $1billion; Local fabrication tonnage has also risen by 40% to 54,000 MT per annum over the same period. These are significant achievements we must continue to build on.

In the same vein, Yulong steel, a Chinese steel company recently made firm commitment to establish a 250,000 MT capacity Longitudinal Submerged Arc welded (LSAW) mill in Yenegoa, while Vigeo Steel is also taking similar steps to establish a 200,000MT capacity HSAW mill in Abeokuta.

Apart from the potential to create over 10,000 direct and ancillary jobs locally, Nigeria stands to retain $700 million that would otherwise be exported to foreign facilities in the absence of these facilities. It is our strong aspiration to prepare these facilities that will supply a substantial proportion of the pipes to be used in the Gas infrastructure projects from Nigeria. Therefore we must support the efforts of the investors comprehensively and without restraint to ensure that the pipemills are completed by 2014.

Alison-Madueke explained that the significance of the visit in highlighting this unprecedented order arising from the implementation of the Nigerian Content Act cannot be overemphasized. “In fact, it is important to state that this is the first of a series of facility visits which will take us, as an industry group, to other locations in Lagos, Port Harcourt and Warri where similar breakthroughs are manifesting in the domiciliation of Oil and Gas operations,” she stated.

On the Minister’s entourage were the top notch of the industry, including some of the heads of multi-national oil and gas companies operating in the country, which underscores government’s commitment to the full implementation of the Nigerian Content Act and industry support for companies that invest in establishment of targeted facilities locally where the Nigerian Content scope can be performed satisfactorily.

One of the main features under the implementation the local content framework is a sufficient provision to protect investments in facilities because the Act does not allow the industry to export work that can be done in Nigeria except it can be clearly demonstrated to the satisfaction of the NCDMB that such capacity has been exhausted.