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Nigeria set to join G20 economies as LADOL’s $3bn Egina FPSO integration yard attains 75% completion
May 27th, 2015
Everything being equal, Nigeria’s economic landscape in the next few years would witness a significant and stable growth as private indigenous investors have continued to ride on the Local Content Act of 2010 to launch the country into attracting billions of dollars worth of foreign direct investment in maritime and oil and gas service sectors.
This development, industry watchers say, has the tendency of keeping the nation’s GDP growth as high as 8 to 9 percent, which will enthrone stability that can enable Nigeria to finally fulfil its potential and become a leading global nation.
Consequently, the over $3 billion investment in the building of Egina FPSO integration and fabrication yard facility currently taking place in Lagos Deep Offshore Logistics Base (LADOL) Free Trade Zone, has the capacity to put the nation’s economy in this expected growth path.
This is coming at a time when Nigerians are worried that the nation has the largest GDP in Africa and the masses are not seeing the benefits, but industry watchers believe this is as a result of Nigerian- owned companies not getting the jobs, but will benefit if Nigerians invest more in various sectors of the economy.
The construction work, which was kicked off in September 2014 after a fabulous groundbreaking ceremony, is expected to deliver the fabrication yard sometime in October this year, while the building of the integration yard would be commencing in June.
Recall that Shell Bonga Contractor, Heerema in 2007 undertook an independent survey of all locations in Nigeria and indicated that LADOL Free Zone was the only feasible site in Nigeria for onshore FPSO integration. As a result, LADOL and Samsung Heavy Industry (SHI) formed a joint venture partnership late last year to build an onshore Egina FPSO integration and fabrication yard at the Free Zone in Lagos.
In the partnership, Samsung is expected to be the technical partner that would use its engineering expertise to build and run the project for oil major, Total Exploration and Production Company, while becoming the local content partner that provides the location.
A recent visit to the free trade zone reveals that the project stands at 75 percent completion stage as the promoters have put in the projected $300 million investment into the construction work. The different workshops, which include the assembling shop and the painting shop that will handle the fabrication and integration work, are under intense construction stages.
The yard is 120,000 square metres and it has the capacity to handle close to 12,000 tons a year. The project is 100 percent privately financed by LADOL and Samsung as the companies are putting in their equities into the project and raising some debt internationally and locally. The facility is expected to create 50,000 direct and indirect jobs; yield about $20 billion revenues; attract 100s of new investment; leads to expansion of existing facilities and four times increase in local fabrication and triggers engineering demand.
“This is going to be a game changer, meaning that a lot can be done in Nigeria riding on the Local Content Act,” said Ladi Jedesimi, chairman of LADOL.
For Nigeria to continue on this growth path, according to him, the country needs a minister of transport including that of trade and investment that has the interest of Nigerian investors and economy at heart. Such ministers, he believes, would help in creating a level playing field in the sector such that there would be competition among operators, and monopoly would become a thing of the past. This would also help to break the trend of foreign domination of businesses in the industry.
“When everything is completed it is actually going to be cheaper to do FPSO integration work in Nigeria than doing it in Korea because things are cheaper in Nigeria, our environment is very easy and we are very close to Europe while Korea is on the other part of the world,” said Amy Jadesimi, Managing Director of LADOL.
Once we build this facility, she says, Nigerian engineers will be trained so as to save the economy and oil companies billions of dollars because it is located in a country where there is plenty of labour with strong intelligent workforce.
Explaining the local content involvement of the company in the project, she says that the greater part of the project will be done in Korea because it is the first. However, it is expected that the benefit will be 50:50 in the next project, while third project will be 70 percent Nigeria and 30 percent Korea.
“We are aiming to get 70 percent local content, that is what Brazil has and China has more than that. Once we start getting up those numbers that is when you see significant cost saving and huge impact on GDP as high as 9 percent,” according to her.
Findings reveal that in China, such growth in GDP is helping the country to attract about $87 billion worth of foreign direct investment every year, and that investment is growing into Chinese-owned facilities, which is key to their development.
“We need more facilities that are owned by Nigerians because that is the key to success. If a Nigerian- owned facility grows, it will make sure that domestication and technology transfer happens. Technology transfer takes time but we estimate that LADOL in the next 10 years can fully run this facility with the technology and engineering required,” the LADOL boss says.
This facility is expected to launch a long-term economic growth and create jobs for Nigerians. At the completion of this project, there would an exponential increase in economic activity as new hub facilities triggers investment throughout Nigeria – steel and recycling plants are expected to spring up, and this would create job opportunities for thousands of youths through a multiplier effect.
She notes that the expertises that we need lie on running the facility in terms of the engineering, layers and the design, and that is where the technology transfer comes in, saying “the facility Samsung has in Korea and the one currently being built in LADOL are the same. The underline engineering is the same but the application may be a bit different because of our unique environment.”
Not only do we save money in the area of development, she says, Nigeria will also save money in the area of maintenance because the FPSO needs to be maintained, and the oil companies do not need to send their FPSO to Korea but to LADOL facility, Nigerdock or the other facilities located in Nigeria are all for the benefit of the economy.
It is also discovered that the next LADOL and Samsung project is going to be a training school that is also very essential, because human capacity development is critical to infrastructure development. This is where the nation is expected to save cost, create jobs and achieve technological transfer. For this project, the training school will first train about 1,000 Nigerians and another 1,000 for the future needs. Owing to the fact that this kind of job has not been done in Nigeria, there are no readily available Nigerians to work in the yard.
“We need at least 1,000 skilled workers for this project, but there are no enough skilled workers that can be employed to work in the yard,” says the LADOL boss.
Culled from business day online