FEC approves $5b oil pipeline contracts

…Nigeria producing 1.78m bpd
The Federal Executive Council (FEC) on Wednesday approved the engineering, procurement, construction and installation contract for Opoho-Okoho flexible pipelines in OML 119 and Escravos to Lagos gas pipeline phase one.
Minister of State for Petroleum, Dr Ibe Kachikwu who disclosed this said that the total contract sum was $3.7 billion.
He said: “The essence of this was that in 2014, the pipeline with which we were evacuating crude in that area gave way and so production became very marginal. We were operating an average of about twenty thousand barrels a day as against about thirty-seven, forty thousand barrels.”
“This contract was, therefore, to replace that pipeline with a new technological flexible pipeline. The last pipeline lasted for only 50 years in the corrosive environment in which they operated. It is a nine-month contract. When completed, we will be able to get back production to forty thousand barrels per day.
“It is very critical and will generate close to two hundred and seventy million dollars per annum. So it is very important.
“The second approval was for the Escravos to Lagos gas pipeline phase one for additional unforeseen works in engineering. The contract had been awarded in 2008 and it was about 83 per cent complete but additional scope has been added to that pipeline and variation of about nine million dollars was approved added to the previous amount which was about five billion naira and $177 million,” Kachikwu noted.
“With the nine million dollars added today, the new contract figure comes to about five billion naira and about $186 million one hundred and eight-six million dollars. That pipeline is so critical; it is what helps us move stranded gas out of Escravos into the Escravos-Lagos pipeline.”
Kachikwu added that with production cuts agreed by the Organization of the Petroleum Exporting Countries (OPEC), Nigeria’s output has been around 1.74 million, excluding extremely light oil known as condensates.
He said that Nigeria was expecting output from Egina oilfield to reach 150,000 bpd by the end of the month which could boost total production.
“The work that we have at the ministry is to determine what component of that 150,000 barrels is pure crude and what is condensates,” Kachikwu said after a cabinet meeting.  “If it is pure crude it raises certain other implications in terms of the OPEC quota. If it is condensates then obviously we smile”


Please enter your comment!
Please enter your name here