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National Content Law: Nigeria to set up pipe Mill in 2012

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  • National Content Law: Nigeria to set up pipe Mill in 2012

Nigeria plans to set up a 250,000-tonnes per annum longitudinal submerged arc welded pipe mill in Nigeria by 2012. This is in line with Nigeria’s Oil and Gas Industry Content Development Act 2010 which is being implemented by a special agency called the Nigerian Content Development Monitoring Board (NCDMB). Read More.

The planned establishment is in collaboration with a Chinese welded pipeline maker, Jiangsu Yulong Steel Pipe. Already a Chinese contractor and senior executives of Jiangsu Yulong are expected in Nigeria in May 2011 for preliminary engineering work. The Chinese contractor has been mandated to work with an indigenous construction company for the construction of the plant between November 2011 and August 2012.

The agreement for the project was reached during a five-day visit to Jiangsu Yulong’s facility in China by a team from NCDMB led by the Executive Secretary, Ernest Nwapa as a follow up to an initial meeting held in September 2010 between the board and the firm in Yenagoa, Bayelsa State.

The NCDMB team included the representative of the Managing Director of Addax Petroleum and a member of Sinopec Group, Mr. Bola Akano and they inspected Jiangsu Yulong’s Longitudinal Submerged Arc Welding pipe mill (LSAW), Helical Submerged Arc Welding pipe mill (HSAW) and the High Frequency Resistance Welding pipe mill (HFRW).

Available information showed that the basic design of the proposed mill had been completed and that 80 per cent of the equipment for the production line dedicated to the Nigerian project had been manufactured and is awaiting testing and shipment according to the chairman of Jiangsu Yulong, Mr. YongQing Tang.

Jiangsu Yulong is said to be positive about the project because of the partnership with NCDMB, local companies and other Chinese companies like SINOPEC which are familiar with the Nigerian operating environment. But it has requested NCDMB to provide guarantees that the Nigerian National Petroleum Corporation and other major operators will patronise the LSAW mill when operational.

However, Mr Nwapa, it was revealed has assured the firm that the Federal Government was actively promoting foreign direct investments, particularly in the energy sector and will provide all necessary support, approvals and incentives to the company.

He said the government was committed to using locally manufactured pipes in the construction of Nigerian Gas Master Plan infrastructure, which involves over 2,000 km of large diameter pipeline, noting that the Nigerian Content Law protects investors in any facility established in Nigeria to manufacture industry inputs and that the NCDMB has demonstrated its ability to enforce this by ensuring that oil majors now source applicable line pipes from SCC Mill, which is the only manufacturer of pipes in Nigeria today, he added.

Nwapa further assured Jiangsu Yulong that when the pipe mill becomes operational, NCDMB will not allow any operator in the industry to import longitudinal submerged arc welded pipes until the capacity of its facility and any similar plant is exhausted.

He further assured the company of the board’s resolve to ensure that the intendments of the Nigerian Content Law as it relates to domiciliation for line pipe procurement is achieved, adding that the law is already being implemented and evidence of local production or concrete plans towards local production is prerequisite for the short listing of companies for contracts.

According to the project implementation schedule, Jiangsu Yulong will work with NCDMB between March and December 2011 to achieve critical milestones, including land acquisition, permits, environmental impact assessment, detailed engineering and early site works preparatory to moving the mill.

Both parties are also to organise training and attachment of Nigerian operators to ensure that a sizeable workforce is available when the plant is ready for testing.