Fostering industrialisation in northern NigeriaNovember 4, 2022
Abiodun Oshodi, CEO of ILF Consulting Engineers, talks to The Energy Year about the AKK pipeline, Nigeria’s energy transition and the company’s growth strategy. ILF Consulting Engineers is an international engineering and consulting firm that helps its clients successfully execute technically demanding industrial and infrastructure projects.
What are the latest operational updates regarding the AKK pipeline?
We are making progress. There is evident dedication from all stakeholders: The Nigerian National Petroleum Corporation (NNPC), the federal government, the EPC contractors, and our consortium. We are closing in on approximately 100 kilometres in length, and all the pipes have been ordered. This is a critical milestone as many pipes are already in the country. This evolution allows our EPC contractors, Oilserv and Brentex, to mobilise additional resources.
NNPC is keen to see more progress, and the EPCs have been very cooperative. On the financing side, as engagements continue, NNPC has funded the project significantly, and as of today, all of the bills have been paid. This shows the kind of commitment that our government has to the project.
Which remote inspection services are you currently deploying to the AKK project?
The overall length of the pipeline and the unique security challenge that we have in that region requires thinking outside the box. We are deploying drones to monitor some of the activities because we have a long distance to cover. Moving into operation, we will not rely as much on drones. We have fibre-optic lines buried along the pipeline, which will provide intrusion sensory and data transfer capabilities. If there is an attempted impact of a specific force close to the pipeline, this tool will detect it and provide required feedback on the location to a control room.
Plans are ongoing to also connect all NNPC gas terminals across Nigeria to a central SCADA system, and the AKK will feed into this system by sending data hour by hour and second by second. This technology is deployed in advanced pipeline systems in Europe due to their long, transnational pipelines; we are transferring it here to Nigeria.
How will the AKK pipeline contribute to the development of the Nigerian energy sector?
It will foster the industrialisation of the north because there is a clear industrialisation asymmetry between the north and south of Nigeria. It will lead to a gas-based economy there, providing employment through the factories which will run on gas. Most of the rice polishing in the north is done with firewood. This requires vast amounts of firewood because it has to be heated for 24 hours.
The associated environmental impact is huge when it comes to deforestation in an already arid area. Having gas available for the significantly large amount of rice farms and mills in the north increases their efficiency and the hope is that we will be able to have lower rice prices shortly. We expect the same impact in other segments such as plastics, fertilisers and petrochemical plants. It is a significant advantage for the whole Nigerian economy.
How would you evaluate Nigeria’s energy transition to a gas-fueled economy?
It is an excellent opportunity for Nigeria considering our massive gas reserves and the potential for gas utilisation and monetisation. Currently, the highest volume of gas utilisation is power, which has two regulated ends: gas price and power tariffs. This dual regulation prevents any gas producer from harnessing the actual value of its gas investments, undermining domestic gas penetration.
Nigeria still has one of the poorest LPG consumption per capita in Africa, regardless of the gas volume in the ground. The main challenge with gas-to-power lies in our transmission and distribution structures. We need to decentralise power through virtual pipeline systems, and the critical solution is represented by modular gas processing plants.
We also need to invest in gas flaring by utilising the currently wasted hydrocarbons to produce LPG and butane for domestic usage or for smaller industrial plants. The gas flare commercialisation project could be a short-term solution until we can adequately utilise Nigeria’s vast untapped gas resource.
What should Nigeria’s political prerogatives be to foster the energy transition?
The private sector should drive the transition. The government should implement proper gas policies while removing subsidies, as they prevent market competition. Companies are struggling due to the lack of an adequate framework for gas-related projects, and investors need to be confident regarding their return on investment. The government should focus on incentivising the gas market for domestic consumption.
The Petroleum Industry Act has provided some framework, but it is not enough if pricing regulations are still in place. The Nigerian people face tough times and specific policies will hurt us more. However, the further we delay, the deeper the wound will be when we finally decide to move forward.
What is the footprint of ILF Consulting Engineers in the Nigerian power sector?
We are primarily focusing on captive power. We are working on a wind farm project in the Niger Delta, we are currently trying to find the right investor for it. Renewables make up a large share of our power portfolio, as we have also worked on several PV projects. We have a mini-grid project in the pipeline, a combination of PV power, hydropower and gas-fired.
Potential Power plants in the North will benefit from the AKK pipeline, and if the opportunity presents itself, we have the capabilities to develop and deploy our knowledge there. If NNPC decides to expand their footprint with more power plants, we are willing to support them.
What is ILF’s growth strategy?
Thanks to our involvement in the AKK project, we are in an enviable position. We are currently working on rehabilitation projects for NNPC, specifically a tank farm, product pipelines and FPSOs. ILF will be pretty busy the next two years if those sign off.
Additionally, ILF will diversify its project portfolio away from oil and gas in the short term. We will focus more on infrastructure projects like transportation, water and power. We ensure that quality is delivered because engineering excellence is our core and our entire background. Nigeria has to start investing money into viable projects, and we, as ILF, are ready to deploy our expertise.