25 August 2017, Sweetcrude, Lagos — The Nigerian Government, Thursday, said it is considering setting a deadline for local fabrication of Floating, Production, Storage, Offloading, FPSO, vessels in Nigeria.
This was disclosed by the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, in Abuja, at the signing of the Memorandum of Understanding (MoU) on the implementation of the $200 million Nigerian Content Intervention Fund, NCIF, between the Bank of Industry, BoI, and the Nigerian Content Development Monitoring Board, NCDMB.
Kachikwu noted that Nigeria would soon set a benchmark and deadline for vessels operating in the country, ensuring that a certain percentage of vessels operating in Nigeria are fabricated in Nigeria.
He said, “Specifically, in areas dealing with vessel fabrication and offshore platforms, such as FPSO, we must set a benchmark for when we can exit. No country in the world has been able to achieve this by just sitting around and giving contracts. We must be able to see that in 10 years time all FPSO in Nigeria would be localized. We must begin to drive that.”
Kachikwu added that over the years, Nigerian companies found it difficult competing with their counterparts from jurisdictions where funding is accessible by five percent or less as compared to Nigeria, where bank lending rates hover around 20 per cent.
He argued that some Nigerian banks are still unable to provide long-term financing required by the local supply chain to build needed capacity.
He also stated that most of the banks in the country lack sufficient knowledge of the oil and gas sector.
He said, “It is a known fact that the exorbitant cost of funds in our market is partly responsible for the high cost of service delivery by Nigerian Oil and Gas Service Providers (NOSPs) and this feeds into the unacceptable high cost of crude oil production.
He added that the Federal Government would further enter into talks with the NCDMB, BoI, oil companies and multinational agencies on how to increase the fund from its initial outlay of $200 million to $1 billion.