BusinessDay
Nigeria's leading finance and market intelligence news report.

Nigeria’s hope of boosting gas supply for power generation suffers setback, again

… as gas pipeline project completion date shifts to December,2020

Nigeria’s hope of boosting gas supply for power generation has suffered a setback again as the completion date for Obiafu-Obrikom to Oben (OB3) gas pipeline project has been postponed again because of technical hitches, BusinessDay investigation has revealed.

READ ALSO: Global gas glut leaves Nigeria’s LNG unsold, threatens N80bn dividend

The pipeline is meant to transport gas for power generation and other industrial developments in the country.

The likely date for the completion of the project is either December this year or the first quarter of 2021. The project was initially slated for completion in 2017, according to officials of the Nigerian National Petroleum Corporation (NNPC) and Nestoil.

At different stages, the project has experienced technical hitches which have consistently delayed efforts to transport stranded gas from the eastern part of the Niger Delta to the western part of the region where it is meant to serve mostly power plants that would use it to generating electricity.

Also, some investments that would have been made by other oil companies which are supposed to key into the pipeline for the evacuation of their gas has also been stalled. For instance, a company like Seplat had signed a final investment decision (FID) on a gas project in anticipation that its gas would be transported through the pipeline but this has not happened.

In the previous years the company handling the project, Nestoil Limited had blamed heavy floods experienced in the country in last years as being responsible for it not making much progress as it should have on the project.

The latest challenge for the completion of the project has to do with the crossing of River Niger.

Chukweluoka Umeh, executive director, Nestoil Limited told BusinessDay that it is the only company in Nigeria that has an “open hole underneath a 62-inch diameter horizontal directional drilling (HDD) hole, a span of 1.9 kilometres with the pipe going 40 meters below the water bed”.

He stated further that there are different layers of soil formations such as top sand, clay sand, hard sand, and small stones which have made it almost impossible for horizontal directional drilling (HDD) to take place.

To overcome this challenge, he said, a ‘Direct Pipe Facility’ is needed and there is no company in the country that has the facility.

He however told BusinessDay that with intervention by the Nigerian National Petroleum Corporation (NNPC) on the project, a company named HDD Thailand has been approached to work with Nestoil so that the pipeline can cross the bed of River Niger. The Thailand company will bring special equipment to do the job.

The gas pipeline project was awarded to two companies, Oilserv Limited and Nestoil Limited. While Oilserv has completed its own segment of the pipeline construction since last year Nestoil is still battling on how to get its own segment completed.

Nestoil officials often alleged that the terrain of their own slot of the project has been most difficult and blamed heavy floods experienced in the country as being responsible for it not making much progress as it should be.

The latest challenge for the completion of the project has to do with the crossing of River Niger. The company told BusinessDay that it is the only company in Nigeria that has an “open hole underneath a 62-inch diameter hole and 1.9 kilometre of 40 meter s below the sea bed.

He said there are different layers of soil formations such as top sand, clay sand, hard sand and small stones which has made almost impossible for Horizontal directional drilling (HDD)

To overcome this challenge a Direct Pipe Facility is therefore needed and there is no company in the country that has the facility.

This has led to the Nigerian National Petroleum Corporation (NNPC) intervention in the project and it has helped to bring a company named, HDD Thailand to work with Nestoil. The Thailand company will bring special equipment to do the job.

At the moment Nestoil and NNPC are trying to mobilise but this also has to depend on COVID-19 because the specialized equipment will be imported into the country.

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