If appointed, Pihl will provide a complete turnkey solution for the creation of the first 70m of quay at Luba, which will almost double the existing handling capacity at the port. The Phase 1 expansion project is expected to be completed by the end of the year. Pihl is a privately owned company with an unparalleled global reputation for quality and excellence spanning back to 1887. It has operated in Equatorial Guinea for 5 years and offers significant cost efficiencies for Luba due to its availability of equipment and skilled labor. Pihl and its subsidiaries have completed large-scale global marine infrastructure assignments including ports, harbors, bridges and tunnels, in countries such as Lebanon, Norway, Jamaica, Greenland, Poland, Namibia and Equatorial Guinea.
David Lenigas, Joint Executive Chairman and Chief Executive of Lonrho, commented:
"Business in the Gulf of Guinea is increasing with ship movements up 45% year on year and we are therefore delighted that we have been able to select a Preferred Bidder for the implementation of our Phase 1 expansion plans at Luba according to schedule. Pihl is a first-class international contractor for marine facilities and we look forward to benefiting from both its pedigree and expertise in Equatorial Guinea."
Over the course of the past twelve months Baker Hughes, one of Luba's largest clients, has completed a 10,000 square meter facility comprising warehousing, offices, workshops and a bulking facility. Baker Hughes is already looking to add an additional 5,000 square meters of open storage adjacent to their present facility. Currently, Luba is improving accommodation, catering and laundry facilities that are being provided at its base camp for 28 expatriate Baker Hughes' personnel.
Luba is also making swift progress in the construction of a 60,000 square meter logistics facility for Mobil Equatorial Guinea Inc. ("MEGI"), part of ExxonMobil. Construction of this facility is expected to be completed by 30 June 2007. This will increase the usage of the site by MEGI, whose contract took effect on 15 November 2006 for an initial period of nine years with three, one-yearly extension options. The estimated value of the contract amounts to more than US$35 million over the remaining initial period.
Within the next 12 months, Luba is expected to complete an additional 1,000 square meters of warehousing, locker and shower rooms for MI Fluid. The warehouse will be used for the storage of palletized chemicals as MI Fluid's present warehouse is unable to cope with the increasing demand for drilling chemicals in the Gulf of Guinea. MI Fluid will also build additional tanks for the storage and distribution of bulk chemicals.
Schlumberger has also requested the construction of additional bulk storage pads on their current facility at Luba. It intends to install two additional bulking tanks for the pumping of chemicals across the quayside for distribution throughout West Africa.
"The successful completion of Phase 1 remains our priority, the cost of which is approximately US$10.3 million," said Mr. Lenigas. "The Netherlands Development Finance Company ("FMO") is no longer engaged to provide debt financing. Luba will instead source alternative project financing over future phases of the development of the port's facilities."
Lonrho is in the process of re-establishing a significant presence on the African continent. Its investment and acquisition strategy, which was adopted following the appointment of David Lenigas as Chairman and Chief Executive and subsequent shareholder approval in February 2006, focuses on the natural resources, infrastructure, leisure and agribusiness sectors. Lonrho's executive team has considerable experience across these industries in a wide range of countries. Last year, the Company announced investments in Brinkley Mining Plc, Nare Diamonds Ltd, Five Forty Aviation Limited and Norse Air Limited.
In May 2006, Lonrho also announced its acquisition of 63% of the issued share capital of Luba Freeport in Equatorial Guinea. The port acts as a logistics center for the oil and gas industries in the Gulf of Guinea and services major oil companies in the region. Its Tax Free status and central geographical location make it a unique choice for a West African regional hub. Lonrho has agreed with the Government of Equatorial Guinea to maintain the overall development program for the Port facilities.
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