Advancing Local Content In Oil & Gas …Onne Free Zone Example

As demonic as the slain Libyan strongman, Late Moammar Gaddafi is today being painted, the maximum ruler once struck the right chord of Pan-Africanism when he insisted that proceeds from Libyan oil must be for Libyan development.

Unable to insist on local content in the prospection and production of Libyan oil and gas, in more civilized ways, Gaddafi, in less than five into his 42 year long ignoble rule forced oil companies operating in his country to pay to his government 80 per cent of their earnings.  The Libyan example, though unpalatable to western investors, earned approval among oil producing nations, who, at various times duplicated the model.

As times went by, however, it became increasingly unacceptable for most oil-producing nation-states to leave the business entirely in the hands of foreigners, hence, the need for reasonable local content, intended to equip indigenous manpower and involve competent local players in the prospection, production and indeed serving of oil and gas production concerns.

Being an oil producing country, Nigeria also shared similar concerns and for ages advocated a viable local content, which, for a long while was either minimal or even non-existent, in spite of various legal enactments to force compliance.

However, one of the biggest breaks to years of frustration came after 1982, when the foreign contractors building the Onne port complex that was to house the Federal Lighter Terminal (FLT), the Federal Ocean Terminal (FOT) and the Internal Transit Terminal (ITT) abandoned the construction due to alleged non-payment of fees by the Federal Government at the time.  Challenged by necessity, the Nigerian Ports Authority (NPA) was forced to invite the private sector to operate at FLT, which at the time, was the only partially completed section of the Onne Port Complex while the FOT was to lay fallow for another decade.

It was then that Nicotes, now INTELS Nigeria Limited, an Integrated Logistics Services provider, which after undertaking a detailed analysis of the logistic needs of the oil and gas industry, accepted the challenge of developing a unique concept required to establish an Integrated Transit/Supply Bases with the boundaries of the port complexes in Onne, Wari and Calabar.  The results of the study led to the rationalising of the logistic requirements for import and supply of equipment and materials whilst at the same time maximising NPA’s  revenue and control as well as for Customs and Immigration.  As the outcome later showed, a rationalised and integrated approach to the logistics needs of off-shore exploration and production really had a major cost-saving effect for all parties involved in Nigeria’s oil and gas industry.

Infact, the introduction and subsequent acceptance of shared facilities and serious concept by all the major oil producing, service and various related oil and gas construction companies according to industry sources drastically reduced operational costs to NNPC and its partners.  Also, rationalised and integrated approach had an even higher cost saving effect when deep off-shore E&P activities started in Nigeria.

Unfortunately, in 1992, construction of the FOT was again suspended with its facilities left uncompleted, thus, forcing government to again advertise an invitation to the marine industry to take up the challenge and participate in the investment intended to resume further development of the abandoned facility. Again, it was INTELS Nigeria Limited alone that accepted the challenge, and embarked on a capital-intensive programme to its competition.

Then again, the expansion of the project which started after large investments in infrastructure, including the construction of approximately 100, 000 square meters stacking area and the refurbishment of 8,000 square metres of warehouse and 250 metres of the partially finished quay apron was eventually delivered.

With that breakthrough, singlehandedly enhanced by INTELS’ huge investment, it became possible for the first ocean-going vessel to be berthed at the Federal Ocean Terminal Berth No. 1 in 1995.  That berth was not only the first, but at the time, the only, dedicated deep sea off-shore berth.  But  recently, there are 1,675 metres of Jetty at Federal Lighter Terminal and 1,320 metres at Federal Ocean terminal (including West African Container), and other ongoing expansion works to accommodate an additional 750 meres new jetty at FOT.

With this enviable profile and huge investment, INTELS was in 2005 awarded 25 years Port concessions of Nigeria’s five designated oil and gas cargo ports but started full operations in 2006 with an option for an additional quarter of century.

But what exactly are INTELS activities?  The print media Anchor of the 1st Practical Nigerian Content Conference holding in Port Harcourt between October 25 – 27, 2011, Mr D.H. Kalio listed among others, provision of port facilities like, pipe jack, stacking area, warehouse, industrial bonded areas, jetty office, water tanks, diesel storage, generators and compressors among others; Transit and Supply base service like cargo handling for oil and gas industry operators; Provision of dedicated equipment and personnel, like cranes, forklifts, pipe handlers, trucks trailers and barges; Provision of residential camps, and Equipment maintenance.

The INTELS’ pacesetter role has also challenged other players to participate in that sector, thus, helping to actualise an even more vibrant and visible local content in the all important oil and gas sector as demonstrated at The Onne Oil and Gas Free Zone example.

To assess these in practical terms, stakeholders and key industry players will today move from the Hotel Presidential base of the First Ever, 3-day Practical Nigerian Content Conference, which opened in Port Harcourt yesterday, for a guided tour of the Onne Oil and Gas Free Zone.  The visit is intended to showcase the practical Nigerian content in the industry.

Titled, “Gateway To Sub-Saharan Oil and Gas Industry and Champion of Practical Nigerian content”, the conference which has as speakers, the Minister of Niger Delta Affairs, Elder Peter Godsday Orubebe, Governors of Rivers, Delta and Bayelsa States, Rt. Hon. Chibuike Rotimi Amaechi, Hon. Emmanuel Uduaghan and Hon. Timipre Sylva, respectively and the Executive Secretary, Nigerian Content Development and Monitoring Board, Engr. Ernest C. Nwapa also has in attendance the Minister of Trade and Investment (supervising Oil & Gas Free Zone), Mr. Olusegun Aganga and the Minister of Transport (Principal of NPA, host of Onne Ports), Senator Idris Umar.

The site visit to Onne Oil & Gas Free Zone today, which is to be hosted by the Oil and Gas Free Zone Authority with its Managing Director, Dr. Noble Abe at the helm will showcase four companies – besides Onne Ports (FLT and FOT), under 25 years concession to INTELS Nigeria Limited.  They are Tenaris, a leading supplier of tubes and related services for the world’s energy industry and other applications, and here in Nigeria, providing finishing for pipes, threading, non-destructive testing (NOT) beveling and inspecting of pipes; Pipe Coasters Nigeria Limited (PCN), a Nigerian leader in pipe coasting that has developed first class facilities at the Onne Oil & Gas Free Zone in FLT, with latest technology CWE Plant; Cameron Offshore Systems, the company with specialty in in-country Callibration of “Christmas Trees for off-shore installations, a work previously handled outside Nigeria and West Atlantic Shipyard Limited, Nigeria’s first shipyard facility for constructing aluminum hulled vessels, a facility conceived to fulfill the need for Nigerian-constructed vessels under the Cabotage Act, thus removing the need for waivers for that class of vessels.

In all, 150 companies reflecting all major industry prayers are home to the Oil and Gas Free Zone, Onne which from all indices, attest to the rich harvest stakeholders would behold today.

The three-day conference which resumes at the Hotel Presidential tomorrow for a practical Content Training Seminar will address among other key issues, Stakeholder Management, Financing Nigerian Content, Implementing Nigerian Content Legislation and Training and Management of Suppliers.

In the end, it is believed, the indigenisation policy which the slain Libyan dictator championed for all the wrong reasons from foreign prospectors’ perspective, shall be appreciated better when indigenous stakeholders eventually cross the crucible to the next level of total independence.  There exactly, is where Nigeria is headed.

Soye Wilson Jamabo