UK Firm Wins PM Contract for $1.55B East Africa Pipeline
United Kingdom-based independent professional services company Turner & Townsend has won a project management contract for a $1.55-billion fuel pipeline in eastern Africa. Black Rhino Group, which receives funding from New York City-based Blackstone Group LP, and Johannesburg-based Mining, Oil & Gas Services, a Royal Bafokeng Holdings subsidiary, are developing the project.
Turner & Townsend in late February said the contract entails “estimating, cost, schedule, risk and change management, performance measurement, report and document control, contracts administration and procurement management.”
Mark Haselau, energy director at Turner & Townsend, says the project is in “a set-up phase.” The project involves the creation of a buffer storage-tank farm in Damerjog, located in Djibouti. The farm will be connected by a 20-in. steel pipeline to a storage terminal and truck-loading facility at Awash, which is on the outskirts of Ethiopia’s capital Addis Ababa.
Turner & Townsend says the pipeline, which will transport about 240,000 barrels per day of fuel, “will greatly ease the pressure on the current 800-kilometer route, which requires 500 tanker trucks daily” on a narrow two-lane highway. When completed, the project is expected to increase both Ethiopia’s and Djibouti’s energy security and also contribute to reduction of harmful emissions.
According to Haselau, “The challenge lies in overcoming the logistical, infrastructural and regulatory issues presented on the African continent, including the physical importation and transportation of material to the many sites and laydown areas along the pipeline route. The project is now in the set-up phase, with the design and procurement processes taking place over the coming months. [It] will address both the planned growth in demand and the short- and long-term fuel-delivery problems in Ethiopia.”
Meanwhile, the planned construction of a 2,600-km natural-gas pipeline between Mozambique and South Africa moved a notch higher early March, when a cooperation agreement for $6 billion in funding was signed in South Africa.
Principals signing the agreement included Mozambique's national oil company, ENH; private consortium Profin Consulting Sociedade Anonima; SacOil Holdings Ltd., based in South Africa; and the China Petroleum Pipeline Bureau, China.
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“The cooperation agreement assures the financing commitments required for the pre-investment and engineering studies and the speedy and effective construction and implementation of the project,” SacOil said in a statement to the Johannesburg Stock Exchange.
The pipeline will transport natural gas to South Africa from Mozambique’s Rovuma basin, where U.S. oil-and-gas company Anadarko and Italy’s Eni are said to hold concessions on billions of cu ft of proven natural-gas reserves.
The cooperation agreement paves the way for the establishment of a joint venture to develop and manage pre-investment studies. The joint venture will include Chinese, Mozambique and South African consortia.
The China Petroleum Pipeline Bureau will pre-finance the studies to bankable feasibility, according to SacOil’s statement. The Chinese firm will be the lead arranger, procuring from Chinese lenders up to 70% of debt financing, the equivalent of $4.2 billion in U.S. dollars.
