AKK Gas Pipeline Project 2021 Project Leader Series PDF

AJAOKUTA-KADUNA-KANO (AKK) GAS PIPELINE PROJECT 2021 Project Leader Series of Knowledge and Experience Sharing PRESENTATION CONTENT OBJECTIVE BACKGROUND NGC’S EXISTING & PLANNED GAS INFRASTRUCTURE PROJECT APPROVALS OBTAINED PROJECT COMPLETION STATUS & JOURNEY SO FAR PROJECT FINANCE QUALITY ASSURANCE...

AJAOKUTA-KADUNA-KANO (AKK) GAS PIPELINE PROJECT 2021 Project Leader Series of Knowledge and Experience Sharing PRESENTATION CONTENT OBJECTIVE BACKGROUND NGC’S EXISTING & PLANNED GAS INFRASTRUCTURE PROJECT APPROVALS OBTAINED PROJECT COMPLETION STATUS & JOURNEY SO FAR PROJECT FINANCE QUALITY ASSURANCE/QUALITY CONTROL ACTIVITIES COMMUNITY AFFAIRS, SAFETY, HEALTH, ENVERONMENT AND SECURITY (CASHES) LESSONS LEARNT Presentation Objective The objective of the presentation is to: Provide insights about the AKK Project Relate the general overview of the AKK Gas Pipeline and the NGC’s Existing & Planned Gas Infrastructures Understand the AKK Project financing framework and commercial structure Give insights to the Regulatory Requirement, Project Completion Status & Journey So Far Share Experience on the key Project Activities including Quality Assurance/Control, Community Affairs, Health, Safety, Environment and Security, ROW acquisition and Lessons Learnt 3 Project Background The Ajaokuta Kaduna Kano (“AKK”) gas pipeline is a part of the phase 1 of the Trans-Nigeria Gas pipeline (“TNGP”), an infrastructure project approved within the Nigeria Gas Master Plan (“NGMP”) in 2008. The AKK is a 614km X 40” gas pipeline designed as a Class 600# to transport gas from Ajaokuta in Kogi State, through Abuja, Niger, Kaduna and Kano States. The project is designed to supply 2 bcfd of gas, the primary source of gas that will underpin the current power developments in Abuja, Kaduna and Kano. The 3 power plants will add an additional 3,600 MW of power to the national grid The project is in line with the initiative to expand the gas footprint in Nigeria and unlock the stranded assets upstream by providing key infrastructure to new frontier within the country 4 Implementation Strategy The Project Implementation was originally conceived as 100% Contractor Finance. The strategy was later changed to a combination of debt (85%) and equity (15%) finance. On this backdrop, NNPC successfully negotiated downwards the contract price from US$2.89 billion to US$2.59 billion, a reduction of about $300 Million. The contract was awarded as EPC lump sum as shows the table below: Description Work Scope Project Cost (US$) Segment 1 Oilserv-CFHEC Consortium Segment 2 Brentex-CPP Consortium 303.4km, 12BVS, 2TGS, 1IPS 310.6km, 10BVS, 2TGS, 1IPS 1,161,661,732.29 1,430,187,316.90 Total (US$) 2,591,849,049.19 The Mandated Lead Arranger is Bank of China (BOC) and SINOSURE as insurer. 5 NGC’s Existing & Planned Gas Infrastructure SIMPLIFIED SCHEMATICS OF MAJOR EXISTING AND PLANNED GAS INFRASTRUCTURE Kano Jebba 40”X221 Km AKK NNPC/Oando (EIIJ) 24” Kaduna Proposed Abuja AKK PP 40”X193 Km Obajana Cement Ilorin 18” Geregu PP Olorunshogo PP PS5 PS4 PS3 36” Sepl at Gas Plant Sapele PP Omotosho Ihovbor PP PP 36” CS2 PS2 24” LEGEND 2 Existing Pipelines Ovad e GP CS1 ELP II 36” Escrav os Gas Plant (EGP) Domestic Gas Supply Plant (Planned) Power Plant Odidi – Warri Expansion Pipeline TNGP (Phase 1) 36”X 90 Km 48”X111 Km ELPS –Ibadan-Ilorin-Jebba (EIIJ) Green Colour (Rich Gas Pipeline or Plants) Umuahia TNGP (Phase 2) Oben Node Delta IV (PS1) PP Odi di Nod e F. Yokri / S. Swamp Odid i CPF Ugehe lli GP Utoro gu GP Dangote / DIL CPF OBOB Assa North/ 36” X 23.3 KmOhaji NAO C GP Rumuji GTS 1 GTS 4 Giga Gas CPF NOPL (24”) CS TNGP (Phase 2) RiveGas) 36”X47Km TNGP (Early 24”X 38Km r Ukanafun Obigbo Node Obig bo North Okolo ma GP Alakiri Afam PP Existing Node, Metering Station, Terminal Gas Station Ikot Ekpene Alaoji PP Imo TNGP (Early Gas) 20”X 16 Km 20”X 26 Km Cawthor ne Channel NGC Facili ty 36” X 110 Km TNGP (Early Gas) 40” X 88 Km Obite GP OUR Pipeline Ubeta 24”X 75 Km TNGP (Phase 1) CPF 24” X 5.5 Km 36”X85Km Ikot Abasi Alscon Seven Energ y Other Gas Off taker Uyo Calabar QI T Okope di 24”X43 Km TNGP (Phase 2) CS ELPS Compressor Station (Planned) CS TNGP Compressor Station NLNG Bonny NGPTC 2017 Oso Platfor m 24”X18Km Domestic Gas Supply Plant (Existing) Trans Nigerian Gas Pipeline 36”X 206 Km TNGP (Early Gas) WEN D CPF TNGP (Phase 1) 36”X18 Km 40”X30 Km Escravos Node OB3 Pipeline (on-going) OB3 OB3 Warri GTP WAGP - Benin - Togo, - Ghana) Ajaokut a CS Enugu Oben Station Ore do GP KP52.7 36” Lekki FTZ LEGEND 1 Proposed Kaduna PP On-going ELP II Ibadan Egbin PP 40”X199 Km Abuja AKK Ajaokuta NNPC/Oando (EIIJ) 24” Proposed Kano PP 6 REGULATORY COMPLIANCE, PROJECT COMPLETION STATUS & JOURNEY SO FAR 7 REGULATORY COMPLIANCE Environmental Impact Assessment (EIA) – FMEV Permit to Survey – DPR Nigerian Content Certificate of Compliance – NCDMB Original and Final Business Case Approval – ICRC Certificate of No Objection – BPP Oil Pipeline License – DPR Letter of no objection from relevant State Governments and other Governmental Agencies (NRC, NIWA, Ministry of Works) 8 PROJECT COMPLETION STATUS BRENTEX-CPP AKK PROJECT STATUS OILSERV AKK PROJECT STATUS Planned Planned Actual 62.45% 60.27% 33.17% 19.56% 16.54% 71.37% 37.68% 31.23% 2.95% 72.72% 28.07% 24.45% 30.25% 2.83% 18.95% Procurement Construction 22.50% Overall Overall Actual Engineering Procurement Engineering Construction 9 JOURNEY SO FAR 2017 - 2019 Project approved by FEC Executed EPC Contracts Carried out FEED verification for the project Commenced financial discussions with Bank of China & SINOSURE. Executed Financing Term Sheet for the funding of 85% by BOC Under-written by SINOSURE Engaged Standard Chartered Bank as Financial Adviser H1 2021 H2 - 2020 H1 - 2020 Issued Mandate letters to BOC and SINOSURE to commence the financing sanctioning & approval process Federal Executive Council ratified Mr. President’s approval of Sovereign Guarantee for the project. Presidential Groundbreaking Ceremony (flag-off) held on 30th June 2020 via videoconferencing Secured Sovereign Guarantee from FMoF Commenced 15km construction activities with NGC free-issued linepipe. Bank of China Credit committee approved the transaction. SINOSURE and other Government approvals being awaited. 15km construction activities: ROW clearing & Grading completed Stringing: 100% completed Welding activities completed for Segment 1 & 2 Arrival of 1st Batch of linepipes for the project. Segment 1: Batches 1 – 7 (140km) Line pipes have arrived and are being hauled to the Ajaokuta site stackyard. Interministerial and STEERCO members visit to the Construction sites was held on 15th December 2020. Segment 2: Batch 1 & 2 (60km) Line pipes have arrived and are being hauled to the Kaduna site stackyard Compensations payment to claimants along the ROW Due diligence by SINOSURE and Bank of China in progress 10 PROJECT FINANCE 11 Project Finance Term sheet for the transaction has been executed by BOC and NNPC. Formal submissions (Project Documents, Financial Model, Bankability Study and report from the Model Auditors) to BOC. Credit approval has been granted by the Board of BOC. Discussions and due diligence are currently in progress with SINOSURE. 12 Commercial Structure NGC Gas Transportation Agreement Gas Off-takers P/line Tariff Payment Escrow Agreement Contract Agreement Escrow Agent NGC P/line Operating Cost Payment - $0.2/Mscf P/line Reservation (Capacity) Payment $0.6/Mscf Balance flows to NGC Account Lenders Debt Repayment for Principal + Interest Debt Service Reserve Account FGN Appropriation FGN Payment Guarantee Certificate EPC Contractors 13 QUALITY ASSURANCE/QUALITY CONTROL ACTIVITIES 14 QAQC– ACTIVITIES AKK Project Quality requirements are achieved through: Use of suitably efficient and effective qualified resources; Use of the NNPC and EPC Contractors’ Quality Management System to ensure the project quality objectives are achieved; Implementation of a robust risk management process to ensure follow-up and achievement of objectives; Continuously monitor and report on Quality matters for authentication and corrective actions 15 QAQC– Project Line Pipes All Line Pipes are manufactured in China by Baoji-Hanzhong and Panyu Chu Kong (PCK ) Line pipes are mainly 40-inch diameter, with various thickness of 17.3mm, 20.2mm and 23.8mm and coated with 3LPE coating. Line Pipes are shipped from China to Warri Port, where they are further transported to various work site from Warri via Rail and Road transport Continuous monitoring is performed by Project Quality Team, during manufacturing, shipping, offloading at Warri and Transportation to work sites Any damages to coatings, pipe bevel or body is noted by Project Quality and are tracked till repaired Deployment of a web-based Pipe Tracking and Pipeline Construction Management System (PTS) to ensure pipeline technical integrity and assurance management 16 QAQC– Welding of Line Pipes Line pipes are stored in various work site at pipe stacked yards, where they can be moved to the ROW for stringing activities prior to welding The Project has 3 main welding methods, manual, semi automatic and fully automatic welding Weld examination is through NDT (RT and AUT) Coating of Welded joints are monitored for detection of defects and repairs All steps are monitored and inspected at every stage by Project Quality teams 17 PROJECT HSE ACTIVITIES 18 Drivers – NNPC HSEQ Policy Statement, Policy Objectives and Goal Zero NNPC HSEQ Policy Statement: NNPC is committed to conducting its activities in a manner that promotes the Health and Safety of its Employees, Assets and the Public as well as the protection of the Environment. NNPC Policy Objectives: NNPC is committed to continual improvement in its operations to eliminate Personal and Industrial accidents as we pursue the goal of no-harm to people and no-harm to environment in all operations and facilities. NNPC Goal Zero Mandate: No incidents and No injuries in all our Operations and Facilities 19 HSE Golden Rule: If it is NOT Safe, Please DON’T DO it !!! HSE Governance Structure in AKK – Integrated System Project Leadership Engineering Construction HSE QA/QC Procurement Support services such as Security, Logistics & Welfare, etc 20 Overall HSE Performance in AKK as at end of May 2021 1. Average Personnel on Board - 1, 582 (PMT, PMC & EPCCs) 2. Incident Free Man-hours (IFMH) - 2, 672, 492 3. Fatality (third party) - 6 (4 from RTA and 2 from Kidnap) 4. Loss Time Injury (LTI) cases - 2 5. Total Recordable Cases (TRC) - 6 6. UA/UC - 2, 419 7. Near misses - 6 8. Road Traffic Accidents (RTA) - 13 (10 Minor & 3 Major) 9. Fire Incidents (FI) - 0 10. Inspections/Audit - 179/3 21 SECURITY STRATEGY/ARCHITECTURE 151 security personnel shall be deployed per camp (a total of six camps, 18 welding crews) will be working on different sections of the project NNPC/NIGERIA ARMY (Military Support) Deployment of Army, Air force Personnel For The Different Construction Spread Minimum Strength required is 453 (151 per Military Sector i.e., AJAOKUTA–ABAJI=151, ABAJI-TAFA=151 & TAFA – KANO=151, Total= 453 Special Forces Personnel on ROW and Stations Communication and Interface - Crisis Management and Emergency Response Static Physical Security Duties, Strategic Security Escort Duties Search and Rescue (with Land Air and Marine Assets) Deploy Site-Specific Security Risk Assessment (SRA) for the 614KM including operational location threat assessment against identified risks Quarterly Security Management Review/reports Reorganization Of Intelligence Acquisition Efforts - Human Intelligence (Humint) And Technical Intelligence (Techint) Additional Strategic Deployment Of Government Security Forces Commence Strategic And Tactical Role For The Military Reorganize The Use Of Host/Vigilante Security Architecture Firm Up Physical Security And Electronic Measures At All Sites Set-up Deterrence Measures Against Target Selection And Threats 22 LESSONS LEARNT 23 Learning From Incidents (LFIs): Investigated RTAs & Improvement Actions 1) Haulage trucks shall undergo technical evaluation by a certified third-party inspector prior to pre-mobilization. All project vehicles must undergo pre-mob inspection before deployment. (Double-Check System) 2) Drivers & Mates shall undergo defensive driving training (DDT) under strict supervision of PMC/PMT prior to deployment. (Strengthening of the Primary Control) 3) All journey managers MUST remotely monitor drivers’ speed and travel route to ensure compliance to approved journey management plan. (GPS Monitoring System) 4) Project Leadership to ensure that all identified HSE concerns are adequately closed out prior to approval for commencement of any work process at all levels. (Strict Implementation of Controls) 5) EPCCs to ensure all relevant stakeholders are aware and involved in proper planning 24 of every task assigned. This enables workers to safely execute tasks as required. (Mandatory toolbox talk, JHA & WMS) Right of Way (RoW), Community Management & Lessons Learnt 2018 - 2019 Acquisition of 224km of the 614km for AKK Project (Exclusive of the existing RoW) Completed Compensation RoW Handed over to the AKK EPC Contractor Continuous Engagements with RoW Communities & other Stakeholders 23 Consultants were engaged for the RoW acquisition The Consultants engaged the Communities along the RoW: a. Sensitization b. Enumeration c. Valuation d. Compensation e. Disbursement f. Management of Community Issues Issues & Challenges 2020 - 2021 Lessons Learned Strict Compliance with Provisions of the Law (Publications, Gazette, Governors Revocations) Ensure Documentation & Record Keeping Prompt Resolution of issues as they come up Complaints & Petitions Litigation Detours Survey Revalidation Security Challenges on some RoW locations (Sarkin Pawa, etc.) Reassessment for adjustment of compensation a) payment of additional compensation when necessary b) Reassessment for alignment b) Continuous Stakeholders Engagements 25 Challenges and Remedial Actions S/n Challenges Remedial Actions 1 Line pipe haulage by trucking is of high Rail haulage was introduced as a risk due to several external factors. safer, faster and cheaper alternative. Each rail conveys 96pcs of line pipes (equivalent to 32 trucks). 2 Insecurity on ROW and Camp sites t Challenges and Remedial Actions 3 Schedule Slippage due to COVID-19 travel restrictions and lock downs 4 Community Interferences at ROW acquisition and work spreads Deployed multi-level security architecture involving Community hunters and vigilante, Special Forces, Civil Defence Corp and Military. Re-based project schedule, deployed virtual platforms & third-party inspectors(TPIs) for offshore FAT. Continuous engagement 26 with relevant Stakeholders and implementation of ESIA mitigation measures. PICTURES 27 Photographs – QAQC ACTIVITEIS Photographs - OILSERV 28 Photographs – Project ACTIVITEIS Photographs - OILSERV 29 Inter-Ministerial, STEERCO, NNPC Mgt and Board Member Site Visit NNPC GMD NNPC COO Gas & Power Minister of Finance Pipe Stringing Activities Pipe Stringing Activities Grading and Stabilization Grading and Stabilization Overhead Water Tank Site Layout Preparation Grading and Stabilization Minister of Finance – Hajiya Zainab Shamsuna Ahmed Chief Operating Officer (Gas & Power) – Yusuf Usman NNPC Group Managing Director – Mele Kolo Kyari Grading and Stabilization Fencing Works Site Layout Preparation Site Layout Preparation Photographs – Presidential Flag Off Photographs - OILSERV 31 Photographs – OILSERV--CFHEC Photographs - OILSERV 32 Photographs – OILSERV--CFHEC Photographs - OILSERV 33 Photographs – BRENTEX-CPP Photographs – BRENTEX-CPP 34 Segment 2: Camp Construction activities Photographs – Brentex/CPP Thank you