The signing of contract, last week, between Digisteel Integrated Services Ltd and Dredging International Services Nigeria for the development of Ogogoro Island as an offshore facilities fabrication and maintenance centre is indicative of increasing indigenous capacity in areas hitherto dominated by foreign companies. Chika Amanze-Nwachukwu writes
One notable achievement recorded by President Goodluck Jonathan within his first 100 days in office was the signing into law of the Nigerian Oil and Gas Industry Content Development Bill on April 22, 2010.
The Nigerian Content bill was initiated by the federal government to help develop local capacity building in the Nigerian oil and gas sector.
Prior to the signing of the local content, indigenous participation in the oil and gas industry was estimated at only around five per cent, indicating that most white-collar jobs were carried out by foreigners. Between 1980 and early 2010, the Nigerian oil and gas industry was said to have imported goods and services worth over $300 billion from foreign economies, with little or no patronage of local companies.
The signing of the Nigerian content law, therefore, not only gave the needed teeth to federal government’s aspiration to increase local participation in the oil and gas sector, but automatically transformed the industry from a major importer of goods and services to an industry that sources a substantial proportion of its inputs locally, thereby empowering Nigerians.
Although the law has helped to cut down on hundreds of jobs taken outside the country for execution by oil companies, Nigeria still lags behind in the area of fabrication and maintenance of Floating Production Storage and Offloading Vessels (FPSOs) because the facility for such services is not available.
To fill in the gap, Digisteel Integrated Services Ltd, a wholly Nigerian company, last week signed a contract with Dredging International Services Nigeria Ltd for the development of the Ogogoro Island, which is an offshore infrastructure facility for the fabrication and maintenance of FPSOs.
Cumulatively, the project, which is the first of its kind in the entire West Africa, will gulp about $500 million. The first phase of the project, which is dredging and reclamation of the Ogogoro Island site will cost $100 million and will take only about four months to be completed.
Chairman of Digisteel Integrated Services, Mr. Olatunde Ayeni, told THISDAY after the signing of the dredging and sand filling contract last Thursday that the project would be financed with loans from two Nigerian banks- Skye Bank and Diamond Bank- and from the company’s own cash flow.
He said the cost of the entire project was about half $500 million, adding that the development would be handled in phases.
According to him, “We will raise the debt from Skye Bank and Diamond Bank and we will provide the equity portion to support the project in the production of oil.”
Ayeni noted that of the 15 FPSOs, which government planned to commit in Nigeria, in line with the upstream development programme of the Ministry of Petroleum, no part of it was made in the country, either by assemblage or in terms of even maintenance.
“If you follow up with the upstream development programme of the Ministry of Petroleum, the government will commit close to 15 FPSOs and no part of it is made in this country, either in terms of assemblage or in terms of even maintenance. The capacity is not there because of course the facility for maintenance is not there. Dorman long is doing its best, but looking at the size of the capacity we are doing here, it is like a capacity of two football fields put together, that is the length of what facility that would be provided on the site. So it is the first of its kind.”
The Digisteel boss explained that the project had been in the pipeline since 2006, and assured that everything would be done in accordance with the Nigerian content.
He added: “We will work in accordance with the local content act, to see what can be done locally towards ensuring that the end product of such big vessels can be done here, that is what we are working towards.”
Ayeni noted the company would ensure the fabrication of offshore installation was done here in Nigeria, and the facilities would include things like helicopter pad, living accommodation for offshore workers. “Like I said the project has been in the pipeline since 2006 and we thank the Nigerian Navy for partnering with us to have the lease of the land for this project and the Ministry of Defence, for the trust they have in our company to handle the project.”
Speaking in the same vein, the company secretary, Mr. Okey Anydiegwu, explained the contract signing was more or less a fundamental aspect of the entire project that has to be completed before the actual construction will commence. He said the signing formerly commences the implementation of the first phase of the project, which is the reclamation of Ogogoro Island.
“Ogogoro Island is a swampy area, it is water log. Reclamation is more or less trying to fill it up, dredge it so that it can be deeper for what we are going to do in future. We want to be having vessels coming in and for the vessels coming, we have to have a certain depth, so we have to go in there and remove the sand, dredge it and expand the area and make it accessible by the vessels. I believe that when it is fully dredged, the Nigerian Ports Authority will be having their vessels passing through there,” he said.
Managing Director of the company, Mr. Peppo Ravelli, however explained the dredging would be followed by construction of the quay wall, which would be approximately 700m meters long. A quay wall is an earth retaining structure, which is used to dock floating vessels and transfer goods. Quay walls are of various types and are used for mooring and berthing floating vessels such are barges, container vessels, ships, boats etc.
Ravelli said: “When we are through with the sand filling, we will do the quay wall, we then do the dredging and then another sand filling. The total duration for dredging, sand filling and quay wall is about one and half years.”
Ravelli is not new in the job and has been in Nigeria for about 22 years. He has handled similar projects in Libya and Nigeria, including Nest Oil and Niger Dock, where he was Managing Director.
About Dredging International
Dredging International has built a reputation in construction of offshore facilities. The company is a leader in construction, deepening and extension of ports and waterways; maintenance dredging, pipeline trenching and backfill; environmental dredging as well as roads, tunnels and embankments.
Nigeria will reap tremendous economic benefits from the project, as most jobs that would have been taking by foreigners would be done in country. Besides, the venture will generate thousands of direct and indirect jobs for Nigerians.
Information from This Day was used in this report.