Buhari Kick-starts $2.8b AKK Gas Pipeline Construction

…Project to unlock moribund industries in the North

-By Benjamin Ike

What could be the biggest and most important project to be inaugurated in Nigeria this year is the flag-off of the construction of the $2.8 billion Ajaokuta-Kaduna-Kano (AKK) gas pipeline by President Muhammadu Buhari. The commencement of construction of the AKK is in keeping with the promise made by the Nigeria National Petroleum Corporation (NNPC) last year that construction of the AKK gas pipeline would commence in the second quarter of 2020.

The flag-off of the AKK is coming despite the global economic downturn caused by COVID- 19 and the attendant fiscal pressure low crude oil prices has put Nigeria under.
Valuechain reports that the AKK and the Nigeria LNG Train 7 are two ongoing projects of the NNPC and its partners which would open the oil and gas space to Foreign Direct Investments (FDIs).

Speaking at the virtual flag-off ceremony of the project at the Ajaokuta, Kogi State and Rigachikun, Kaduna State campsites simultaneously, President Buhari said the project was very dear to the people of Nigeria and must succeed.

‘‘Today marks an important chapter in the history of our great Nation. It marks the day when our domestic natural gas pipeline networks; from Obiafu in Rivers State, Escravos in Delta State and Lekki in Lagos State, are being connected through Kaduna to Kano States thereby enhancing national energy security, creating balanced development, and further integrating our nation,’’ he said.

Single Biggest Gas Pipeline
The AKK pipeline is a 614km-long natural gas pipeline currently being developed by the NNPC and a host of partners. It is set to be laid between Ajaokuta and Kano in Nigeria and forms phase one of the Trans-Nigeria Gas Pipeline (TNGP) project.
The pipeline project is being implemented via a build and transfer (BT) public-private partnership (PPP) model, which involves the contractor providing 100% of the funding.

The pipeline will cost an estimated $2.8bn. It will feature a diameter of 40inch and is expected 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 project will result in the establishment of a connecting pipeline network between the eastern, western and northern regions of Nigeria. It also aims to create a steady and guaranteed gas supply network between the northern and southern parts of Nigeria by utilising the country’s widely available gas resources.
In addition, the development is expected to reduce the large volume of gas flared annually in Nigeria, as well as the subsequent environmental impact. NNPC originally announced tenders for the development of the AKK pipeline in July 2013. A project proposal was submitted to the Infrastructure Concession Regulatory Commission (ICRC) in June 2017.

The PPP compliance certificate was issued in July 2017 along with the approval of the feasibility study. The Federal Executive Council (FEC) granted approval for the project in December 2017.

AKK Pipeline Route
The pipeline is slated to originate from Ajaokuta in Kogi state and pass through, Abuja, Niger, and Kaduna before ending at a terminal gas station in Kano. The project will be executed in three phases, with phase one covering the construction of a 200km-long segment between Ajaokuta and Abuja Terminal Gas Station at a cost of $855m.

Oilserv Limited one of the indigenous contractors awarded the engineering, procurement, construction, installation, testing, and commissioning of the first segment of the 614 km x 40-Inch Gas pipeline, which is from Ajaokuta to mid-way between Abuja and Kaduna is said to have achieved significant progress with ongoing detailed engineering design, topographical and geotechnical surveys, haulage and stacking of line pipes in preparation for commencement of construction activities.

It was gathered that haulage of 40″ line pipes to Ajaokuta and Kaduna stack yards were in progress. Also, 1024 line pipes (about 50%) have been delivered to the respective stack yards in Ajaokuta and Kaduna.

Phase two of the AKK gas pipeline will comprise a 193km-long section to be built between Abuja and Kaduna at a cost of approximately $835m. Phase three will involve the construction of a 221km-long section between the Kaduna terminal gas station (TGS) and Kano TGS. This section will cost an estimated $1.2bn to complete.
Other infrastructure planned for the development include various associated valve stations, as well as intermediate and terminal facilities. The natural gas pipeline is expected to require the laying of approximately 51,200 steel line 40in-diameter pipes featuring a total combined weight of 240,768t.

Furthermore, the project will utilise 24in-diameter steel line pipes for spur lines, as well as 40in-diameter line break valves and future tie-in valves.

Contractors Involved
The engineering, procurement and construction (EPC) contract for phase one was awarded to OilServe / Oando consortium in April 2018. The Brentex / China Petroleum Pipeline Bureau (CPP) consortium was awarded the EPC contract for phase three.

Benefits of AKK Pipeline
Enumerating the benefits of the project, billed to be completed in two years, the President Muhammadu Buhari at the flag-off ceremony said it will provide gas for generation of power and for gas-based industries which would facilitate the development of new industries. It will also ensure the revival of moribund industries along transit towns in Kogi State, Abuja (FCT), Niger State, Kaduna State and Kano State, he said, adding that the cascading effect and impact of the AKK, when operational, will be immeasurable. His words: ‘‘It has significant job creation potential both direct and indirect, while fostering the development and utilization of local skills and manpower, technology transfer and promotion of local manufacturing.’’

According to the NNPC, the AKK natural gas pipeline is intended to boost Nigeria’s electricity generation capacity, as well as strengthen the industrial sector within the country’s eastern and northern regions.
The project is also expected to promote and increase the local usage of domestic gas. Additionally, it is anticipated to increase the country’s revenue generation through the export of natural gas. The project when completed will not only boost power generation in Nigeria which in turn will accelerate economic growth & quality of life of Nigerians but will also create thousands of jobs. It will equally eliminate gas flaring in Nigeria and save gas projects host communities from costly health challenges and environmental degradation associated with gas flaring.

When finally joined with the proposed 4,401km-long Trans-Saharan Gas Pipeline (TSGP) to export natural gas to customers in Africa and Europe, it will add billions of dollars annually to our national revenue.

Elixir for Success
The potential for the project to succeed is doubtless going by the kind of local and international support the project has garnered.

The China National Petroleum Corporation (CNPC), one of the largest integrated energy groups in the world and an EPC contractor on the project, have severally thrown their weights behind the project assuring NNPC of its unflinching commitment towards securing funding for the successful financing and subsequent execution of the AKK pipeline project.

Valuechain reports that the financing for the 40-inch by 614km gas pipeline is expected to cost about $2.8billion, for the project described as the single biggest gas pipeline in the history of oil and gas operations in Nigeria.

While 85 per cent of the money is expected to be funded by the financiers which include Industrial and Commercial Bank of China (ICBC), Bank of China, and Infrastructure Bank of China with Sinosure, China’s Export Credit Agency (ECA) providing insurance cover, the remaining 15 percent will be provided by the contractors which include Oilserve/Oando consortium, as well as Brentex/China Petroleum Pipeline (CPP) Bureau consortium.

The CNPC has placed a very high premium on the AKK Project, describing it as the beginning of several collaborations with NNPC. The AKK gas pipeline project has also received a major boost from Kaduna State Government which has pledged to join forces with the NNPC to ensure effective optimisation of the project by stakeholders across the state.

Already, the state government has gone ahead by signing a Memorandum of Understanding (MoU) with OCIP of Morocco for the development of a fertiliser plant in Kaduna State.

“As soon as the gas is here from the AKK Pipeline project, it will open up many possibilities. Therefore we are ready to support you in whatever way we can”, said Kaduna State Governor, Mallam Nasir el-Rufai. He said aside the AKK Project, the NNPC was keen on executing other projects that would trigger industrialization and create jobs for the nation’s teeming population.