Chinese steel plant project ‘to support Nigerian oil and gas development’

7 January 2016

Chinese steel pipe manufacturer Jiangsu Yulong Group has broken ground for a major manufacturing plant in Nigeria’s Lagos Lekki free trade zone, aimed at supplying the country’s developing oil and gas industries.

China said the first of three investment phases in the Yulong Lekki project would be an estimated $50 million.

Yulong Group deputy general manager Willy Wen told China’s state Xinhua News Agency that the plant would become “the No.1 complex welding and seamless pipe manufacturer in Nigeria” as the group seeks to exploit new international markets.

Wen said the first phase of the project involved building a submerged arc welded pipe production unit with a design production capacity of 150,000 tonnes annually.

The second phase, at an estimated investment cost of around $60m, will see construction of “an advanced equipped steel pipe production unit” with a further annual production capacity of 150,000 tonnes, Wen said.

The third and final phase will see the group launch a $10m tubing, casing, drill pipe and line pipe production unit, Wen said.

According to Xinhua, China’s consul-general in Lagos Liu Kan said at the ground breaking ceremony, on 16 December, that the project “was an important part of China-Nigeria industrial cooperation which would bring win-win benefits”.

Xinhua said the project, which would cover an 180,000 square-metre site, was expected to create more than 1,000 jobs for Nigerians and “enhance modern technology transfer by training engineers in the steel fabrication business”.

On completion, the plant “will be one of the largest heavy industry plants in Nigeria”, Xinhua said.

Nigeria is among countries at the forefront of growing momentum for investment in start-ups in Africa, according to research published earlier this year. The 2015 Venture Finance in Africa report, by start-up funding platform Venture Capital for Africa (VC4Africa), said the sum of all tracked investments in Kenyan start-ups in 2014 was $4.7m, followed by South Africa ($2.8m), Uganda ($1.5m) and Nigeria ($1.4m).

According to the US Energy Information Administration (EIA), Europe is the largest regional importer of Nigerian oil. In 2012, Europe imported 889,000 bpd of crude oil and condensate from Nigeria, accounting for 44% of total Nigerian exports. The EIA also listed Nigeria as the largest holder of natural gas proven reserves in Africa and the ninth largest holder in the world.

A report released last year from consultancy Ernst & Young (80-page / 2.4MB PDF) said Nigeria had been the largest recipient of foreign direct investment in Africa over the last decade, 80% of which had been invested in the oil and gas sector.