By Adewole Kehinde
On the 13th of December, 2017, the Federal Executive Council at its meeting gave approval to the US$2.8 billion Ajaokuta–Kaduna–Kano (AKK) gas pipeline project.
The PPP Compliance Certificate of the project in line with the ICRC Act and the National Policy on Public Private Partnership was issued by the Infrastructure Concession Regulatory Commission (ICRC) on the 10th of July, 2017.
The project will be delivered through a Build and Transfer (BT) PPP model with 100% Contractor Financing.
The Federal Government through the Nigerian National Petroleum Corporation launched the construction of the 40-inch x 614km Ajaokuta-Kaduna-Kano (AKK) Gas Pipeline project on June 30, 2020.
The Nigerian National Petroleum Corporation’s (NNPC) $2.8bn Ajaokuta-Kaduna-Kano (AKK) gas pipeline project is to be completed within a 24-month timeline.
The 614km pipeline project is the phase one of the 1,300km-long Trans-Nigerian Gas Pipeline project.
The Trans-Nigerian Gas Pipeline project forms part broader 4,401km-long Trans-Saharan Gas Pipeline, which will export natural gas to customers in Europe.
Expected to boost domestic natural gas utilisation for Nigeria’s economic development, the AKK pipeline will run from Ajaokuta, in Kogi State and traverse Abuja (FCT), Niger, Kaduna and terminate at Kano.
It will be recalled that the NNPC said that the project would unlock 2.2 billion cubic feet of gas to the domestic market as well as support the addition of 3,600MW of power to the National grid.
About 85% of the capital cost for the project is been funded by some financiers including Industrial and Commercial Bank of China (ICBC), Bank of China, and Infrastructure Bank of China.
The remaining 15% for project cost is to be funded by the contractors which include Oilserve/Oando consortium, as well as Brentex/China Petroleum Pipeline (CPP) Bureau consortium.
The pipeline project will have capacity to transport 3,500 million metric standard cubic feet per day (Mmscfd) of dehydrated wet gas from several gas gathering projects located in Southern Nigeria.
The AKK will complement other gas transmission systems in the country that include the Escravos-Lagos Pipeline I and II with 2.2 billion cubic feet per day capacity as well as the East-West connection via the OB3 pipeline with 2.4 billion cubic feet per day capacity.
According to the Group Managing Director (GMD) of the Nigerian National Petroleum Corporation, Mal. Mele Kyari, he said that the construction of the Ajaokuta-Kaduna-Kano Gas Pipeline project is currently at 15% completion.
The project is presently crossing the River Niger, through the Ndoni-Aboh river crossing in Rivers and Delta States which will deliver gas from the eastern part to the country into the western corridor according to the NNPC GMD.
Mal. Kyari further stated that the NNPC has the assurances of the government on the delivery of this transnational gas pipeline project, which will create a major gas trunkline for gas delivery to the domestic market.
A lot of investment opportunities abound in the natural gas sector of the Nigerian petroleum industry. Increasing attention is now being given​​ to this vital sector.
Government’s aspirations for the gas sector include creating new industries out of the old oil industry; capturing economic value and generating as much revenue from gas as from oil. Others are developing the domestic gas market and, ending gas flaring by 2030.
Remarkable progress has been recorded towards the realizat​​ion of these objectives. Of the current annual gas producti​​on of about 2,617.67 Bscf, about 9.48% is flared for the period January to December, 2016. This is a drastic drop from the 40% proportion flared before the advent of this administration.
The hitherto flared gas is being channeled into gas powered projects for rapid utilization and monetization with a view to maximizing value addition to the nation’s natural gas resource.
Domestic gas consumption is expanding as a result of the ongoing power sector reforms while gas export which was non-existent prior to 1999, has received a strong boost.
Comprehensive and integrated gas utilization Master plan/programmes have been embarked upon, in which LNG and IPP developments are being given priority. The expected increased export earnings from LNG, coupled with adequate domestic power supply from IPPs, will strongly support and broaden economic expansion and urbanization, increase the income generating capacity of Nigerians and lift the general wellbeing.
It will further reinforce Government’s efforts towards integrating the Host communities into the mainstream of national development and growth.​
Many gas-based projects are being undertaken in line with Governments aspirations in the sector. They include:
Domestic Gas Market Expansion:
As a result of various projects established, total gas utilized in the country increased from about 573 million scf/d in 2004 to about 839.70 mmscf/d in 2016​. Substantial demand growth is expected in this decade.
Consequently, domestic demand for natural gas is expected to increase considerably. Investment opportunities therefore abound in the domestic gas market.
​The Liquefied Natural Gas Projects:
Since production started from trains 1& 2 in 1999, NLNG has been one of the fastest growing endeavours in the world. Train 3 was commissioned in November 2002 while Train 4 came on stream in November 2005 and Train 5 was started up in February 2006. Train 6 became operational in December 2007.
Plans for building Train 7 that will lift the total production capacity to 30 MTPA of LNG are currently progressing with some preliminary early site preparation work initiated. Further work awaits an FID by the shareholders.
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In addition, the Brass LNG with 2 trains and an output of 10mtpa FID is expected in the years ahead while the Olokola (OK) LNG which is a 4 train plant with an expected output of 20mtpa will also be delivered​.
The West Africa Gas Pipeline:
The Final Investment Decision of the West Africa Gas Pipeline was signed on 16th December 2004. The initial capacity utilization of the pipeline which is 200 mmcf/d is expected to increase to about 460 mmcf/d by 2026 This project which is of strategic importance is expected to foster cooperation and economic development in the sub- region in the spirit of the New Partnership for African Development (NEPAD).
The Tran Saharan Gas Pipeline:
A Tran Saharan gas pipeline running from Nigeria to Algeria is under consideration. The objective is to make Nigerian piped gas available to Europe. The technical and commercial viability of this project is however being studied through a feasibility study being undertaken by a consultant on behalf of NNPC and Sonatrach.
Gas to Liquids & Natural Gas Liquids:
These include the Escravos Gas-to-Liquids with a capacity of 34,000 barrels per day, the Escravos Natural Gas Liquids 1, 2 & 3 as well as the Mobil Natural Gas Liquids 1& 2.
The project is already creating direct and indirect employment while fostering the development, technology transfer and promotion of local manufacturing.
The AKK project will surely expand the key critical gas infrastructure in the country to promote the use of gas in the domestic market.
*Additional information from NNPC Website
Adewole Kehinde is the Publisher of Swift Reporters and Public Affairs Analyst based in Abuja. He can be reached via 08166240846, 08123608662.
