The Federal Government yesterday announced the approval of a $9m variation for the Escravos to Lagos gas pipeline, raising the total contract sum to $186m.
The approval was granted during yesterday’s Federal Executive Council (FEC) presided over by President Muhammadu Buhari at the presidential Villa, Abuja.
The Minister of State for Petroleum, Ibe Kachikwu told State House reporters that the approval was one of the two memos approved for his ministry.
Kachikwu said: “The Escravos to Lagos gas pipeline phase one contract was for additional unforeseen works in engineering, contract that had been given in 2008 and it was about 83 percent complete but additional scope has been added to that pipeline and variation of about $9m was approved today (yesterday).
” With the $9 million added today, the new contract figure comes to about N5bn and about $186m. That pipeline is so critical; it is what helps us move stranded gas out of the Escravos of Oghara region back into the Escravos Lagos pipeline. It is two months contract. ”
He said the second contract, was an EPCI contract which is Engineering Procurement Construction and Installation contract for the 12 inch by six inch Opoho Okoho flexible pipelines in OML 119. He said the contract was awarded to messrs National Oil Verco completion and MELCURT Nigeria Ltd.
“The total contract sum was for $3.7 billion and roughly about $37m. The essence of this was that in 2014, the pipeline with which we were evacuating crude in that area gave way and so production became very marginal, we were operating average of about 20,000 barrels a day as against about 37 to 40,000 barrels and this contract was therefore to replace that pipeline with a new technological flexible pipeline that would resist corrosion.
“The last pipeline lasted for only 50 years a lot of corrosive environment in which they operated. It is a nine month contract, when completed we will be able to get back production in upper level to 40,000 barrels per day. It is very critical and will generate close to $270 million per annum. So it is very important, ” he said.