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SPDC orders N7.8bln worth of line pipes from Nigerian company

The Shell Petroleum Development Company of Nigeria Ltd (SPDC) has awarded a contract for line pipes worth over N7.8bln to S. C. C. Nigeria Ltd (SCC), in one of the biggest efforts by an IOC to encourage in-country manufacture of the key pipeline making material. SPDC signed the contract with the Abuja-based company in August this year. It had earlier worked with S. C. C. to enhance their production processes and capability, such that the company is now able to manufacture line pipes of varying diameters.

“The contract means line pipes are now available within Nigeria, saving money and time, and developing the right expertise and creating jobs at the same time,” said Igo Weli, SPDC’s General Manager, Nigerian Content Development. At the same time, SPDC is studying the findings of a feasibility study it commissioned on the establishment of a second mill in Nigeria which will manufacture other types of line pipes.

Mr. Weli added: “We commissioned the study earlier this year and are currently working with the Nigerian Content Development Monitoring Board on how the mill will be set up. Two line pipe mills in Nigeria will really be an exciting development for the oil and gas industry and for the country as a whole.”

In a related development, Shell Nigeria Exploration and Production Company (SNEPCo) is equipping and training the personnel of the Nigerian Institute of Welding in mechanical and corrosion laboratory testing. Some N237mln will be invested to procure, install and commission laboratory equipment for Mechanical Testing, Metallographic Testing, Chemical Analysis/Instrumentation, Corrosion Testing and Non Destruction Testing. These activities will help the Institute to realise its potential as the foremost knowledge centre for welding engineering in Nigeria.

In 2010, Shell-run companies in the country awarded contracts worth nearly $947 million to Nigerian companies. This represented more than 96% of the overall number of contracts and amounted to over 93% of the total expenditure on contracts.

After the passage of the Nigerian Oil and Gas Industry Content Development Act, 2010, Shell companies in Nigeria have continued, as far as possible to make use of local contractors and hire workers from the communities in which they operate. The Nigerian content strategy of Shell-run companies in the country also promotes the use of locally manufactured goods and Nigerian service companies in production operations, projects and well engineering.

This month (October 2011), Shell has adopted the Local Content Model being applied in Nigeria for use in its global operations. Ernest Nwapa, Executive Secretary of the Nigerian Content Development and Monitoring Board, said, “That tells us that what we are doing here is effective and we want to show the world that, if Shell says this implementation model is effective, then it is effective. It is through Nigerian content development that this industry and country can be transformed and industrialised.”

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