N228bn Oil, Gas Fabrication Facility Rots In Lagos Creek
An oil and gas drilling and production fabrication facility worth $600 million (about N228 billion) is lying to rot in the creeks of Lagos.
The facility, owned by Kaztec Engineering, is at Snake Island where the Badagry Creek Industrial Park Free Zone Trade Zone is situated. However, the entire fabrication yard licensed in 2014, was grounded in March 2015 when Addax Petroleum had tax issues with the federal government.
This led to the abrupt halt of the platform construction for oil production from Antan and Ofrima/Udele fields at the facility.
There was a new ray of hope at the weekend when a committee on the resuscitation of the facility set up by the federal government visited the facility for assessment.
The committee led by Senator Magnus Abe, a board member of the Nigerian National Petroleum Corporation (NNPC), is to recommend ways and means to reactivate the dormant oil and gas support facilities.
At the zone, Daily Trust observed that four of the company’s vessels, namely Ekulo Cheyenne (a DP barge), Ekulo Spirit, Ekulo Tornado and Ekulo Explorer, are inactive as both the foreign and indigenous crew members have deserted the facility.
It was also learnt that the contract workers in the fabrication yard were relieved of their duties while all projects being executed by Kaztec Engineering for Addax Petroleum, Shell and ExxonMobil were suspended.
The visit is part of the commitment of the federal government after it recently announced that it will reactivate all moribund and dormant oil and gas support facilities nationwide, to boost production and job creation.
Commenting during the assessment, Abe said, “In 2015, Addax (a technical partner in the project) ran into some issues with the federal government over taxes and audit, so they called a force majeure on the contract. By that time, Kaztec Engineering had spent more than $600 million on the project.
“This facility was projected to save the country and generate an income value of $33 billion over a 10 year period, but the entire thing collapsed as a result of the force majeure.”
He said the ministries of justice, finance, trade and investment, NNPC and the Department of Petroleum Resources (DPR) are working to ensure the revival of the facility and others in a similar state.
The Director of DPR, Mr Sarki Auwalu, noted that critical equipment in the facility were not utilised for the benefit of Nigerians.
“The oil industry depends on facilities like this to actualise their investment because it is like a support system for the oil and gas sector.
“Our visit here is because an edifice we licensed is dormant. But we are going to make it active because we see it as an opportunity to grow the oil and gas industry.
“We have issued several licenses for modular refineries that need fabrications. We cannot allow this kind of facility to remain underutilised,” Auwalu said.
Auwalu also regretted that some fabrication projects are now done in China after the facility shutdown, a negative for the Nigerian economy.
The Director of Engineering at Kaztec, Mr Mike Simpson, said some of the unutilised equipment in the facility included a dive support vessel, pipe laying vessel and an already constructed jacket, which could be used for oil and gas operations.
He said when the facility was operating, it had 2,000 direct employees and 7,000 indirect employees.