Nigerian Content: Madueke orders evaluation of facilities

*Pipe mill projects to employ 10,000, retain $700m
*Indigenous marine vessels now worth $1bn

01 February 2012, Sweetcrude, Abuja – The Minister of Petroleum Resources, Mrs. Diezani Alison-Madueke has directed the Nigerian Content Development & Monitoring Board to work with operating Oil and Gas companies to evaluate existing machine shops, dock yards, fabrication yards and other facilities which can be upgraded to meet industry specifications.

The Minister gave this directive on Tuesday when she led chief executive of international oil companies on a facility visit to SCC Pipe mill in Abuja, the first in the series of planned physical assessments of key local content facilities across the country.

Noting that many existing facilities were underutilized and could be harnessed at reduced costs to support industry operations locally, Madueke instructed that recommendations from the evaluation should get to her office before July 2012.

She commended the model used at SCC pipe mill whereby the facilities set up originally to manufacture water supply pipes were upgraded to service the Oil and Gas Industry.

SCC first manufactured pipes for Exxon Mobil which were installed on the company’s Edop facility offshore in 2011, thereafter opening the flood gates for current orders from Shell, Chevron and Agip.

Madueke also explained that the cumulative orders from the operators not only ensured that the company retained about 350 Nigerian workers, but now has the potential to grow the workforce to 500 with projected work flow from the industry.

The Minister stated that ongoing establishment of Longitudinal Submerge-arc Welded pipe mill in Yenagoa by Yulong Steel and planed longitudinally welded steel Mill in Abeokuta by Vigeo Steel will create over 10,000 direct and ancillary jobs and retain $700m in the Nigerian economy.

The projects will also create 3000 training opportunities as well as other benefits to the Nigerian economy when completed by 2014.
She further explained that many other investors have also expressed interests to establish pipe mills in Nigeria and their efforts must be supported by government.

According to her, “Our role as Government is to create the conditions that will stimulate and incentize these investors. Investments in a few more pipe mills will increase capacity and create local competition which will surely improve quality, operational efficiency and drive costs down in the medium to long term.”

The Minister assured that the establishment of steel pipe mills in Nigeria is a viable venture given that the Oil and Gas industry demand is envisaged to grow to over a million metric ton per annum to serve the upcoming field developments, Gas Master plan and Gas Revolution projects.

There will also be replacement of aging pipelines, brown field modifications, construction of new refineries and petrochemical plants which would require steel pipes.

She reiterated the commitment of President Goodluck Jonathan to the full implementation of the Nigerian Content Act and support for companies that invest in the establishment of targeted facilities where the Nigerian Content scope can be performed satisfactorily.

She added that provisions of the Nigerian Content Act protect investments in facilities and disallow the industry from exporting work that can be done in-country, stressing that local facilities must be accorded first consideration in line with the principles of the Act.

The Minister also reported that the industry had recorded positive results from the intervention of the Nigerian Content Development and Monitoring Board.

According to her, there is now a growing interest of Original Equipment Manufacturers and investors to set up facilities in Nigeria while the market share of indigenous vessel owners had risen from less than $200m in 2009 to $1bn and local fabrication tonnage has also risen by 40 per cent to 54,000 metric ton per annum over the same period.

Madueke also commended the chief executives of the operating companies and stakeholders of the industry for collaborating with the Board and adhering with guidelines issued by the Board especially those relating to the domiciliation of equipment component manufacturing, expatriate quota management, utilization of indigenous marine vessels and indigenous rig ownership scheme.

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