Engr. Ahmed Kida-Musa, Deputy Managing Director DeepWater District, Total
Total, as one of the leading international oil and gas companies in the world and indeed in Nigeria has been active for almost sixty years. At the annual Nigerian Oil & Gas Conference and Exhibition which is a gathering of industry leaders and stakeholders in Nigeria, the Deputy Managing Director (DMD), Deep water District, Engr. Ahmadu-Kida Musa took time to explain about the Egina project.
Kida made it known that the conference offered opportunity to discuss important issues the oil industry may be grappling with as it tries to assume a more local approach in its activities. He opined that the Egina Project was sanctioned in 2013, three years after the Nigerian Oil and Gas Industry Content Development Act was enacted.
Historically, Kida stated that the major players in almost all the key sectors of Nigeria’s Oil and Gas Industry were the international oil companies. From exploration to production, refining and trading, “The main actors were foreign multinationals.” Oil blocks and assets were owned by foreign oil majors and oil service contracts for engineering, drilling, wireline logging services, supply of safety equipment, construction and fabrication, were largely awarded to foreign owned companies. These companies were managed by foreign personnel especially for technical positions. Many project teams were based abroad and only few Nigerians were lucky to be trained to work outside the shores of the country, to acquire the relevant technical knowledge and experience necessary to take up key position in Nigeria.
However, Kida made it clear that in the 1990s, Nigeria joined other emerging economies which sought to take ownership and control of their natural resources for exploitation and transformation into economic development. To achieve this, some of these emerging economies began to formulate policies and legislation that would compel economic actors to adopt policies that promoted local over foreign.
Hence, in 2005, Nigeria took away what many analyst consider the most significant step towards Nigerian Content by introducing what was known as the Local Content Policy. The main thrust of this Local Content Policy was to promote a framework for which local competencies in the oil and gas sector will be developed through the active involvement of Nigerians using local resources. The intention of the government was to use the Local Content Policy as a means of discouraging capital flight in the oil and gas industry.
The DMD stressed further that the Nigerian government local content policy implementation was administered by guidelines issued by the regulatory agencies such as the Department of Petroleum Resources (DPR) and the Nigerian Content Division of the Nigerian National Petroleum Corporation (NNPC). The industry started to take some steps to embrace Nigerian Content but before the Nigerian Oil and Gas Industry Content Development Act came into effect, “Many industry players approached Nigerian Content as a matter of corporate social responsibility.” Nigerian content was carried out at the discretion of the individual company and often dependent on availability of funding and previous experience with local contractors and partners.
Kida emphasised that there were some companies that realized that developing competencies was a key to sustainability in the future. Total decided to invest in the establishment of a world class petroleum training institution in Nigeria, showing its commitment to capacity building and the development of Nigerian content.
The Total DMD threw more light on the company’s project. He revealed that Nigerian content was already a major component before the Act for the company. The Akpo project which was sanctioned in 2005, recorded a cumulative Nigerian content performance of 44%. In 2008, the Final Investment Decision (FID) was taken on the Usan project and by the time the project was completed, Nigerian content record had climbed up to 60%. Obviously, before Nigerian content became a matter of law, some operators in the industry were already on board.
Kida spoke on post local content era that came to existence in 2010, that on April 22, 2010, the way the business of oil and gas was done in Nigeria changed, “That was the day the Nigeria oil and gas Industry Content Development Act was signed into law.” The industry, which had already started to embrace the objectives and ideals of Nigerian Content doubled its efforts. The Act ushered in an era where in-country value became the focus. The government led the charge with legislation and efficient monitoring through the Nigerian Content Development and Monitoring Board (NCDMB) things began to change more rapidly.
The underlying philosophy and objectives of Nigerian content focuses on in-country competency, technology development and job creation. There is also opportunities for revenue retention, research and development including industrialization. The relationship between the NCDMB and the industry is that of partners who understand that their goal is the same. Indeed, local capacity means more robust bottom lines for the industry and more value for the country as a whole. Nigerian owned engineering firms as well as construction and fabrication yards to be more visible as important players in the industry. Indigenous firms became strengthened to participate in FEED and eventually improved capacity fabrication yards began to compete for major development projects.
Kida was of the view that it was against the backdrop of this new approach to Nigerian content that Total took FID to develop Egina in 2013, three years after the Nigerian Oil and Gas Industry Content Development Act became law. The result is that Egina became a test case for local content. Egina is the latest of Total’s deep-water developments, and the third project of its kind developed by Total in Nigeria after Akpo and Usan. These projects have brought progressive increase in levels of Nigerian content and it is well illustrated by the percentage of total project workload performed in Nigeria.
The DMD revealed that in the coming weeks, the FPSO will sail away to Egina field, which is located in OML 130, approximately 150 kilometres offshore Port Harcourt. He said, it is the deepest offshore development carried out so far in Nigeria, in water depths of over 1,500 meters and the project is designed to produce 200, 000 barrels per day of oil at plateau. In addition to oil, the Egina field will produce gas. Associated gas will be partly re-injected into the reservoir to maintain reservoir pressure and particularly channeled to supply domestic gas market.
According to Kida, the project management teams for both Total and the main EPC contractors, have been based in Lagos and the location of these teams in Nigeria to carry out engineering and procurement activities has generated significant employment opportunities at various skill levels ranging from office administrative staff to top level engineers and managers.
Kida noted that the detailed engineering of Egina FPSO topsides was executed in-country by Samsung with a consortium of Nigerian engineering companies which provided employment of about 250 Nigerian engineers.
No doubt Egina is a success story that will linger in the footprint of Nigeria’s oil industry visa-a-vis local content. Therefore, its sustainability will boost the oil industry in the country.