NPA’s Drive to Boost Oil & Gas Free Zones

Eromosele Abiodun posits that the safe arrival of the Egina FPSO is an indication of the infrastructure and operational preparedness of the Nigerian Ports Authority

In the 1980s,   several studies were undertaken by the federal government designed to define policy towards identifying areas or regions where companies are taxed lightly or not at all, free of customs or possesses favourable custom regulations in a bid to encourage development and foreign investment.

The continuation of this global strategy and the Nigeria comparative advantage in the oil and gas has elicited enormous contribution to the nation’s economy. Over the years,  oil and gas  accounted for about 90 per cent total export and 80 per cent of government revenue. It is also on record that Nigeria is the biggest producer of oil and gas products in the sub-Saharan African region. Its reserves have proven to be the largest in the area and are strategically located in the middle of the region.

Consequently, the federal government decided to make a distinction to establish the Oil and Gas Free Zones Authority (OGFZA) through the promulgation of Decree No, 8 of March 29, 1996. This Act forms the authority as a parastatal and regulatory agency in charge with responsibility of attracting foreign direct investment (FDI) in the country as it relates to oil & gas and other hydro carbon. The authority is also responsible for registering, licensing and regulating Oil & Gas Free Zones (OGFZ)in Nigeria.

The success of the regulatory activity of  the OGFZA is the  pioneer OGFZ at Onne from a fallowed piece of land and now transformed into a model not just in the West African sub-Region but also throughout the continent.

Many entities are now operating in these OGFZs and leveraging on their wide range of opportunities and incentives lined up by the Nigerian government. Encouraged by the successes recorded at Onne, in terms of achievement recorded as it relates level of FDI, revenue generation and technology transfer, government encourages  OGFZA licensee a similar FZ at Warri in Delta State on 14th May, 2011 and as matter of urgency emphasised that the OGFZA to take over all OGFZs in Nigeria as contained in the Authority statutory mandate.

Recently, the registration/licensing of the Eko Support Services (Oil & Gas Free Zone) in Lagos, was announced. The new OGFZ was established in partnership with Eko Support Services Limited under a Public/Private Partnership model. Also, it is designed as a structural platform for technology transfer to indigenous Nigerian oil industry workers as per the local content development policy of government.

Eko Support Services is expected to provide direct and indirect employment to at least 1000  people  within the first three years and has an immediate investment commitment of over $124 million.

Brass Oil & Gas City is another OGFZ. This is a project approved by the federal government of Nigeria, to be under the supervision of the authority. The project, as proposed, is to position Nigeria as a leading hub for downstream oil & Gas manufacturing and industrial activities in Africa.

NPA’s Giant Stride

Meanwhile, while the federal government deserves commendation for its effort at licensing oil and gas free zones, agencies responsible for the implementation of the government’s directive cannot be put aside.

For instance, since her appointment as the Managing Director of the Nigerian Ports Authority (NPA), Ms. Hadiza Bala-Usman has championed the revival of existing oil and gas zones.

The NPA, in its promise to increase its support to the oil and gas industry, enhance export trade, encourage port users to land their cargoes directly at the free trade zones and to ensure that the ports, serve as platform for oil and gas support services.

Bala-Usman’s support for oil and gas free zones yielded the needed fruits on Wednesday 24^th of January 2018, when the NPA received the biggest oil and Gas vessel, a Floating, Production, Storage and Offloading (FPSO) facility that would be deployed at the Egina Offshore field, developed by Total in partnership with Nigerian National Petroleum Corporation (NNPC) and some foreign Oil Companies like CNOOC, SAPETRO and PETROBAS.

Speaking at a reception held at the LADOL base in Lagos, the NPA boss described the safe and hitch-free arrival of the FPSO vessel as an attestation to the infrastructural and operational preparedness of the NPA, explaining that the authority is equipped to serve her clients efficiently now and going forward.

According to Bala-Usman, this will be the first time NPA and Nigeria, will be receiving a vessel of this size, described as the largest ever to berth anywhere in West Africa, as she expressed happiness to showcase the capacity of the Authority in trying tomeet the demands of the various clients.

 

Ensuring Enabling Environment

The managing director pledged to ensure that the enabling environment would be provided so that trade and logistic costs in Nigeria would be internationally competitive.

“The Egina FPSO vessel success story comes at a critical time of Nigeria’s economic renaissance. The completion of the fabrication and integration of the Egina facility will further strengthen the Federal government’s local content policy with multiplier effect, evident in employment opportunities, capacity building, technology transfer, reduction in capital flight as well as attraction of high value new oil and gas investment to the country.

“The Egina FPSO vessel sailed from Samsung Heavy Industries Shipyard in South Korea on October 31, 2017, for a 90- day voyage to Lagos, where it was received at the first FPSO fabrication and integration yard in Africa, located within the LADOL free trade zone in Lagos.

“The newly built oil and gas processing platform has a hull length of 330metres, width of  61metres, depth of 33.5meters and gross tonnage of 219,000tonnes, with storage capacity of 2.3million barrels. The platform can house 240 personnel onboard,” she said.

She added: “It also has an oil processing capacity of 208,000 barrels per day and gas compression capacity of 10.2million cubic square meters per day. It will be deployed within the Oil Mining License 130 and the integration process of the Egina FPSO at LADOL is expected to take six months, before its onward journey to the Egina offshore field in Port Harcourt, Rivers State.

“The NPA  is the federal agency that serves as the landlord and operates seaports in Nigeria. The authority, under the supervision of the Federal Ministry of Transportation, administers six major ports, oil terminals and jetties spread across the country, and remain the country’s main international gateway.”

In recognition of the federal government’s support in her effort to revive existing oil and gas free zones, the management of the NPA, under the leadership of Bala Usman commended President Muhammadu Buhari, the Minister of Transportation, Rotimi Ameachi and the Board of Directors of the NPA for their unflinching support in the quest to transform the organisation to become the hub of maritime commerce in the region.

NPA Partners OGFZA

That is not all. A few days after the FPSO arrived Nigeria, the NPA announced that it has opened discussions with the OGFZA  to forge closer ties on a range of issues from use of land in the ports where oil and gas free zones are located to strategic cooperation.

The strategic engagement move between the two government agencies began when the Managing Director of OGFZA, Mr. Umana Okon Umana, paid a courtesy call on  Bala Usman, at the NPA head office in Lagos.

Briefing her  on the series of reforms and progress in the free zones since he took over as CEO in September 2016, Umana said more would be achieved with greater support and cooperation of the NPA.

He proposed a partnership agreement in which the NPA would cede lands to OGFZA in the nation’s seaports hosting oil and gas free zones to free up access to land for investors in the form of subleases. Suggesting that the proposal should be formalised with a Memorandum of Understanding (MoU), Umana explained that OGFZA would administer such leaseholds in collaboration with the NPA.

He emphasised that collaboration between OGFZA and the NPA on land use and other policy issues would have positive impact on the ease of doing business in the free zones in line with the policy thrust of the federal government.

The NPA MD commended Umana  on his efforts to sanitise the free zones by insisting that all licensees comply with extant laws and regulations and pledged unflinching support to OGFZA in the bid to realise the full objectives and potential of the oil and gas free zones.

She expressed full support for Umana’s position that OGFZA and NPA needed to strengthen their collaboration to ensure that a level playing field is provided for all licensees and concessionaires.\

Bala Usman pledged to direct port managers in the nation’s seaports to work more closely with OGFZA, promising ever ready support to new and existing investors in the free zones with regard to approval for facility upgrade and other material need.

 In particular, she said the Notore Channel would be dredged to boost economic activities in Onne Oil and Gas Free Zone.

Umana had while speaking at another forum recently declared that OGFZ Gas offers enormous advantages and incentives to foreign companies to invest in Nigeria.

He added that OGFZ creates the environment necessary to support Nigeria’s economic and industrial development.

He also said that all goods manufactured in the free zones can be sold in the Nigerian market.

“The OGFZ helps Nigeria maximise its natural resources to attract foreign investments and create employment, enhance the welfare of the people, aid technology transfer and the overall economic development of the country,” he said.

He said the success of the Intels OGFZ  has led to the creation of similar zones in Warri and Lagos.