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Cablegate: Lagos Support Platforms for Deepwater Oil and Gas

VZCZCXRO4812
OO RUEHMA RUEHPA
DE RUEHOS #0562/01 2201421
ZNR UUUUU ZZH
O 081421Z AUG 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9312
RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHUJA/AMEMBASSY ABUJA PRIORITY 9101
INFO RUFOADA/JAC MOLESWORTH AFB UK
RUEKJCS/SECDEF WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RHMCSUU/DEPT OF ENERGY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEAIIA/CIA WASHINGTON DC
RHEFDIA/DIA WASHINGTON DC

UNCLAS SECTION 01 OF 02 LAGOS 000562

SIPDIS

SIPDIS

DOE FOR GPERSON, CGAY
TREASURY FOR ASAEED, SRENENDER, DFIELDS
COMMERCE FOR KBURRESS
STATE PASS USTR FOR ASST USTR FLISER
STATE PASS TRANSPORTATION FOR MARAD
STATE PASS OPIC FOR ZHAN AND MSTUCKART
STATE PASS TDA FOR EEBONG,PDAVIS
STATE PASS EXIM FOR JRICHTER
STATE PASS USAID FOR GWEYNAND AND SLAWAETZ

E.O. 12958: N/A
TAGS: EPET ENERG PGOV NI
SUBJECT: LAGOS SUPPORT PLATFORMS FOR DEEPWATER OIL AND GAS
OPERATIONS UNDER WAY

1. Summary: ExxonMobil, Chevron and Shell have called for
creation in Lagos of a modern industrial and support services
base to support their deepwater exploration, construction and
production. Deepwater oil and gas expenditures in Nigeria
currently total USD 10 billion per year. Two companies
bidding to provide such a base are Skillbase, a Jagal Group
subsidiary, and Lagos Deep Offshore Logistics Base (LADOL).
End Summary.

Deepwater Integrated Support Center
-----------------------------------

2. Tom Cardale, Managing Director, Skillbase, gave Carolyn
Gay, Policy and International Relations Office of the U.S.
Department of Energy and Pol-Econ Chief a tour of the Jagal
Group's Deepwater Integrated Support Center (DISC) on July
19. Upstream offshore oil and gas expenditures in Nigeria
currently average USD 12 billion per year, with the deepwater
sector accounting for USD 10 billion of that total, Cardale
said. Chevron, ExxonMobil and Shell have called for the
creation of a modern industrial and support services base,
focused on deepwater technologies and services, in Lagos,
Cardale said. DISC/Skillbase/Nigerdock is among the
companies bidding for the contract. Lagos and Port Harcourt,
where support services for on-shore and shallow water service
providers are based, are equidistant from the deepwater
fields. Companies hope to avoid the security problems faced
by oil company workers in Port Harcourt by operating out of
Lagos, Cardale said.

3. DISC will be operated by Skillbase, a Jagal Group
subsidiary. Jagal owns the Nigerdock shipyard and fabrication
facility, located on four kilometers of Snake Island, near
the Tin Can Island Port, that forms the core of the DISC
facility. Nigerdock facilities include a floating dock and
drydock, a repair quay, shipbuilding and offshore fabrication
workshops and multipurpose workshops, and will be expanded to
allow it to service Floating Production, Storage and
Offloading (FPSO) vessels. Skillbase will also expand
existing housing, offices, open storage areas, container
yards and warehouses. DISC is located within a Free Trade
Zone which provides duty free import and export, on-site
customs processing, import/export license exemptions,
exemptions from corporation taxes, exemptions from quotas on
expatriate workers, repatriation of foreign capital, profits
and dividends, and prohibition of strikes. Plans are to
serve the DISC facility will be served via high speed ferries
and on-island minibus service.

4. The Jagal Group, headed by Anwar Jarmakani, has been in
existence for 40 years. In 2003, the group acquired the
state-owned Nigerdock facility. Nigerdock constructed
mooring buoys for the Shell Bonga and ExxonMobil Erha fields
as well as structures for Chevron's Agbami FPSO and Escravos
Gas projects.

Lagos Deep Offshore Logistics Base
----------------------------------

5. On July 10, Econoff and Econspec met with Dr. Amy
Jadesimi, Deputy Chief Executive officer and Chief Financial
Officer of Lagos Deep Offshore Logistics Base (LADOL) and
Lagos Integrated Logistics Enterprise (LILE). LADOL was
established in 2000 by Global Resource Management Ltd (GRML),
which manages the facility. A free trade zone was also
established at the LADOL site in 2006. LADOL has a total
area of 120 hectares, five of which were developed in Phase I
of the project. LILE expects that 30-40 hectares will
eventually be used for its own logistics business and the
remaining area will be available for investors. Phase I,
which required an investment of USD 40 million, involved
construction of a quay for offloading two vessels at a time,
quayside facilities for ocean-going vessels, facilities for

LAGOS 00000562 002 OF 002


installation of a water, fuel and dry bulk pipelines, a water
treatment plant, warehouse and covered storage areas, office
buildings and a sewage treatment system. Subsequent phases
will include construction of a health clinic, establishment
of a security service, purchase of ferries and helicopter
access areas, construction of permanent housing and leisure
and restaurant facilities. According to Jadesini, LILE has
met the requirements for ISPS certification and expects to
receive certification in August.

6. Carolyn Gay cleared this cable.
MCCONNELL

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