Nigeria planning new shipyard to serve LNG carriers, oil industry

The idea behind the new shipyard is to reduce ‘capital flight’, increase local content and boost employment opportunities in Nigeria.

Under a contract with the Nigerian Government, China Harbour Engineering Company (CHEC) will conduct the feasibility study, performing geotechnical and bathymetric surveys and a market assessment. CHEC will use the findings to develop a technical proposal, construction plan and cost estimates for the shipyard.

Funded by the Nigerian Content Development and Monitoring Board (NCDMB), the study is part of the board’s mandate to promote oil and gas industry infrastructure and increase retention of industry spend in local content and services.

Nigeria’s crude oil and natural gas resources are the backbone of the country’s economy. It is the largest oil producer in Africa and the fifth-largest exporter of LNG in the world.

According to Minister of State for Petroleum Resources Chief Timipre Sylva, the high level of vessel activity related to the offshore oil and gas industry in Nigeria provides an opportunity to “retain substantial value in-country through the provision of drydock services.”

Development of the shipyard is timed to take advantage of Nigeria LNG’s (NLNG) Train 7 project, which will increase its LNG production capacity from 22 mta to 30 mta. This increased capacity will require additional LNG carriers to transport NLNG cargoes.

Minister Timipre added that the shipyard project would also benefit from the upcoming implementation of the Africa Continental Free Trade Agreement (AfCFTA), with Nigeria serving as a potential hub for shipbuilding and repair.

The construction and operation of the shipyard would create local employment opportunities and contribute to poverty reduction in line with the aspirations of President Muhammadu Buhari’s government, said Minister Timipre.

In his presentation at the announcement of the study, NCDMB executive secretary Simbi Kesiye Wabote said the Brass shipyard project and other ongoing efforts would help achieve 70% Nigerian content by 2027.

He confirmed that the project was being driven by the NCDMB in conjunction with NLNG as a capacity development initiative on the back of the Train 7 Project.

Mr Wabote explained there are “over 20,000 ships working for the oil and gas sector in Nigerian waters and the annual spend was over US$600M in the upstream sector.”

Citing additional statistics, Mr Wabote said the oil sector spent US$3Bn on marine vessels between 2014 and 2018 of which 73% was spent on crew boats, security vessels, dive support vessels and fast supply intervention vessels. Other vessels in that category include mooring launch and shallow draught vessels, he said.

Mr Wabote said most of the vessels that operate in the offshore oil industry in Nigeria travel to Ghana, Equatorial Guinea, Cameroon or other countries for drydocking.

The objectives of NCDMB’s Marine Vessel Strategy is to promote Nigerian ownership, increase participation and increase capacity of local shipyards to build, service and maintain marine vessels of various sizes and manufacturing of vessel components and consumables in-country.

The project’s schedule indicates that the site work would be executed within six months and feasibility study completed in four months, according to Mr Wabote.