Fostering industrialisation in northern Nigeria TEY_post_Abiodun_Oshodi

For this administration, the AKK project is a true landmark in terms of gas utilisation and industrialisation. It is a real game-changer.


Game-changing projects in Nigeria

July 6, 2021

Abiodun Oshodi, managing director of ILF Consulting Engineers, talks to The Energy Year about how the crisis is changing EPC players’ receptiveness to joint ventures and why the AKK and Nigeria-Morocco pipelines are poised to be transformative. ILF Consulting Engineers provides engineering and consulting services for industrial and infrastructure projects across the country.

How has ILF Consulting Engineers endured the crisis and what new trends are hitting the oil sector in Nigeria?
The year 2020 began positively, with the AKK pipeline as our crown project. But when the lockdown came into effect, everything came to a halt. Initial worries were on how to work remotely and efficiently. Then came the challenges of the projects. We experienced significant delays in work and site visits as there were restrictions on movement. We really struggled to get things moving.
However, when looking at the broader picture, Nigeria has proven to be relatively resilient in the face of the impact of Covid-19. Contracts from 2020 remain in motion and some of the expected major projects have reached the FID stage.
Looking forward though, our clear dependence on oil, oil price fluctuations and the global trend towards energy transition will definitely have an impact on the oil sector in Nigeria. Many oil projects will stall and this is already reflected in the attitude taken by most IOCs, such as Chevron, Shell and Total, as they reduce the number of contracts being awarded. There are also plans to reduce volumes of investment from 2021 and beyond. If one thing will keep eyes on the crude oil ball, it will be the interest in marginal fields.

How is the crisis changing EPC players’ receptiveness to entering into joint ventures?
There is not a great amount of EPC business in Nigeria at the moment. Even though there has been a lot of investment, the volume of work is not great. At the same time, there are too many EPC companies chasing very few contracts, which has given way to an environment where the only way we can all survive is through JVs, either incorporated or unincorporated. We have all suffered, so we can no longer keep the large personnel numbers we used to have.
Parallel to this, there are still major competitive concerns where larger players will face challenges from smaller companies. Thus, the effect comes more from how affordable one’s services are for the buyer than from the quality of the services. The importance of quality has not dropped significantly below that of price, but firms are competing for first place. Companies that are competent enough but also appear to be more expensive can only survive when they find cheaper or more affordable partners. This is a win-win situation for both parties.
The same goes for many of us that want to diversify away from oil and gas, and play competitively in the power or infrastructure sector. We cannot do it by ourselves; we have to find partners. So, JVs and consortiums are the only way forward.

How is technology changing the way EPC is carried out and conceived today?
At the moment, our projects are running 100% virtually. Teams are sitting in various countries carrying out all of our projects and this not only applies to us but also to our clients and subcontractors. In this new reality, technology has been the driving force.
Fortunately, technology did not have to catch up. It was already there; we only had to harness it. For instance, we use 3D models to present the appearance of a potential project. This technology has been around for some time but has been improved. Significant upgrades have been made to existing virtual infrastructure, seen in PDMS [plant design management system] software, advanced 3D models and drone systems. For example, in the AKK project we use drones to monitor works while in design we use NAVISWORKS to give our clients a virtual feel for the design. So, we are applying a lot of this technology, which is very much in demand nowadays.


What are the latest developments on the AKK gas pipeline and what governmental support is it receiving?
The project is in full swing, and we have built more than 30 kilometres. We are currently bringing in more pipes, which have begun to arrive from different mills. The lockdown did not affect the construction works much because the government has been very supportive. You see, for this administration, the AKK project is a true landmark in terms of gas utilisation and industrialisation. It is a real game-changer.
NNPC is making laudable efforts to conclude this project on time, and they have provided us with everything we need. This goes to show that if the right mindset is applied, projects can be successfully completed on time. For example, security is a major concern but we are getting a lot of support from the Nigerian government to ensure that on-site work is done safely. Lastly, we must understand that the AKK pipeline is the largest section of the Trans-Nigerian Gas Pipeline, which has seen fresh life this year, and it is promising to revolutionise the gas landscape in Nigeria.

How pivotal will the Nigeria-Morocco pipeline be in boosting gas markets across West Africa?
The Nigeria-Morocco Gas Pipeline is a unique project. For Africans, it is highly symbolic as it is a signal of co-operation across the whole West African coast. If we are able to achieve such a project, whether in phases or complete packages, it could be a good sign of what we can achieve moving forwards. Work has started on a potential FEED tender but we don’t know when the tender documents will be sent out to potential bidders.
This project will open up the gas and power market for many countries within ECOWAS, not only for those who don’t have gas and need power, but also for those who are seeking gas-hungry markets within West Africa. Africa has growing economies and there will be demand for gas for the next 20-30 years. Furthermore, this pipeline provides an opening to the European market which, of course, has high potential.

What are the major factors driving the demand for LNG within Nigeria’s local market, and what inroads is ILF Consulting Engineers making in the area of gas flaring?
Locally, two things will drive the demand for LNG in Nigeria. One is the need to meet the demand for power. The deficit we have in power has created an opportunity for virtual pipelines, mostly due to our deficient infrastructure, which makes it difficult to get gas from suppliers to power plants. This is added to the challenges in power transmission. There is a large demand for localised power supply and this is where CNG and mini-LNG models are being looked at as plausible solutions.
Secondly, we have the Nigerian Gas Flare Commercialization Programme. Small to medium-sized volumes of flare gas can be captured, liquefied and compressed, and made available. This is a two-birds-with-one-stone solution as it not only solves an environmental issue, but could also provide feedstock for the power sector.
This last area continues to be very interesting for us, and we have acted as advisers for a consortium that has shown interest in the programme. When it comes to the tendering process, we have been asked to select the source of gas we want to apply for. However, there is a lot of work to be done because at the tail end you still have to match the model of getting the gas out and taking it to the site. Getting the infrastructure together is what we all will have to start thinking about.
This is still a work in progress and we are yet to see if the required investment will be made as it is not certain whether anyone will invest in the programme until they are sure there is a great chance of getting high gas volumes.
Thus, there are plenty of opportunities in the area of gas flaring, as well as in the construction of CNG and mini-LNG plants which will try to meet the demand NLNG does not make up for in Nigeria. There is a huge amount of work in the gas sector in this country and we are trying to position ourselves as a strong partner for designing the infrastructure, pipelines, process plants, storage facilities and so on.

What importance does ILF Nigeria have within the group’s international portfolio, and what is the company’s vision for the African continent?
ILF Nigeria is one of the oldest companies in the ILF Group, celebrating its 40-year anniversary this year. Nigeria is a pivotal market within the African space. We have remained in this country regardless of the market ups and downs and now we want to use our stronghold as a springboard for the rest of the continent. We have already made inroads in East Africa and South Africa, but we are looking at many Francophone countries in West Africa – to penetrate them either directly or through third-party companies. The idea is to sell our brand and our business across the entire continent.
At the same time, our strategy is also to diversify. Along with our primary focus on oil and gas, we have now started making inroads into power and the next area should be infrastructure. We have a good CV worldwide with projects in railways, airports and tunnels, and we would like to bring this expertise into Nigeria. We dream of roads and railways connecting this nation to the whole West African coast. There is still a lot to be done, but we want to be the ones paving the way for this dream to materialise.

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