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AKK

How $2.8bn AKK gas pipeline project’ll deliver steady power

Adewale Sanyaolu

Nigeria may soon be heading to the path of becoming an industrialized nation with the signing of a two-year deal for the construction of the $2.8 billion 200 kilometer Ajaokuta-Kano-Kaduna (AKK) gas transmission pipeline project.

The contract which is a Nigerian National Petroleum Corporation (NNPC) project under the Nigerian Gas Master Plan is to be executed by the Oilserv/Oando consortium in the Lot 1 section.

The 614 km x 40-Inch gas pipeline is to cover about 200 kilometer from Ajaokuta in Kogi State to Kano through the Federal Capital Territory, Abuja.

Upon completion, the AKK gas pipeline will ensure adequate supply of gas to the North, improve the gas infrastructure expansion within the domestic market and boost power generation in the region.

But, for the gas pipeline project to achieve the intended purpose, the Federal Government should ensure that all issues perceived to be frustrating gas producers must be addressed.

Managing Director of Frontier Oil Limited, a gas producing company, Mr. Dada Thomas, said the Federal Government should immediately parley indigenous gas companies on ways of boosting production if the country must meet its power and other gas related needs.

While some experts have blamed the worsening state of power across the country to the inability of the Transmission Company of Nigeria (TCN)- an entity still being managed by the Federal Government to wheel out electricity delivered to it by the generation companies, others have blamed poor gas pipeline interconnectivity as the bane.

Synopsis of AKK project

Upon completion, 24 months from now, the AKK gas pipeline would enable connectivity between the East, West and North, currently non-existent. It would also enable gas supply and utilisation to key commercial centres in the Northern corridor of Nigeria with the attendant positive spin-off on power generation and industrial growth.

The scope of work includes the engineering, procurement, construction, installation, testing, and commissioning of a 40” x 614km class pipeline system from Ajaokuta to Kano, with associated valve stations, intermediate and terminal gas facilities.

Providing details of the contract awarded to consortium of indigenous and Chinese entities under a 100 per cent contractor financing model, the NNPC said Lot 1 with total length of 40inch x 200km stretching from Ajaokuta to Abuja Terminal Gas Station awarded to the OilServe/Oando Consortium had a contract value of about $855million.

Lot 2 whose contract agreement is yet to be executed covers 40inch x 193km, stretching from Abuja to Kaduna with contract value of about $835 million.

The NNPC said Lot 3 which runs from Kaduna Terminal Gas Station (TGS) to Kano TGS with total length of 40inch x 221km was awarded to the Brentex/China Petroleum Pipeline Bureau (CPP) Consortium under a contract value of about $1.2 billion.

The above brought the total value of the entire project to over $2.8billion as approved by the Federal Executive Council at its 46th meeting on 13th December, 2017.

Similar initiatives

Between 2010 and now, almost 500km of pipelines had been completed, commissioned and now delivering gas. Some of the completed pipelines included the Oben-Geregu (196km), Escravos-Warri-Oben (110km), Emuren-Itoki (50km), Itoki-Olorunshogo (31km), Imo River-Alaoji (24km) and Ukanafun-Calabar pipeline (128km).

In addition, there is ongoing construction of the strategic East-West OB3 pipeline (127km), scheduled for completion by Q3 2018 and the expansion of the Escravos-Lagos Gas Pipeline System scheduled for completion later in 2018. 

Gas pipeline projects without power

But, Nigerians are worried that despite the series of gas pipeline projects that have been executed in the past with more of such AKK project coming on stream, the power supply situation in the country has continued to deteriorate.

Thomas, noted that some 182tcf (trillion cubic feet) of gas is in Nigeria waiting to be developed, lamenting that, what is lacking and urgently required are the political will, enabling policy, commercial and regulatory framework to unleash the true potential of gas to the benefit of all Nigerians.

He said that the future of gas and gas-to-power in Nigeria is bright and called on the government to grant the kind of incentives it did for the International Oil Companies (IOCs) in the past to the indigenous operators who contribute over 53 per cent of local gas production in Nigeria.

“I strongly believe that the federal government should incentivize indigenous operators to undertake domestic gas projects which will help Nigeria meet its power and other gas related requirements. If the Government could give incentives to IOCs in the past then surely it is only fair and equitable that they also give similar incentives to the indigenous operators,” Thomas advised.

He informed that the highly successful Bonny NLNG project by the Shell-led Joint Venture, the Chevron Escravos Gas to Liquids project and similar projects were all given incentives to ensure these projects came to fruition.

He also condemned the current gas prices in Nigeria describing it as lower what is obtainable in markets around the world. This, according to him, has made the gas business less attractive than the oil business for more than 40 years.

He said that the solution to this is “for the gas transactions to be based on a willing-buyer-willing-seller market-driven commercial platform in which the government is removed from regulating the commercial transactions between interested parties.”

Securing gas pipelines

The constant attacks on pipelines are a major setback back to the realization of steady power supply in the country.

Between January and March 2015, Nigeria lost a minimum of N8.04 billion to the incessant vandalism of gas pipelines, according to the Nigerian Gas Company (NGC), a subsidiary of NNPC.

Okwuosa explained that, pipelines are built based on what is called ‘engineering codes.’ And these codes determine the way you scope the project, the way you scope the specifications of the projects and once the cli-ents do that, our job is to build to that specification.

‘‘There are many ways to secure a pipeline but the most efficient way to secure a pipeline is the engagement of stakeholders including the government, the community and all the people that have direct impact on the pipeline.

There are various forms of technology such as the defiled optic system that’s not being in-stalled in the pipeline because it wasn’t part of the original scope. But what we have to know is that anybody that is tampering with a gas pipeline is a clear saboteur.

 So the incidence of gas pipeline vandalism is such that is abnormal and not usual. Whenever it happens, it means that whoever that has gone up to vandalise the pipeline cannot be easily stopped because it is an act of sabotage.

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