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Indigenous operators must collaborate to stimulate investment in oil & gas sector — Okwuosa

Indigenous operators must collaborate to stimulate investment in oil & gas sector — Okwuosa

Emeka Okwuosa, the founder and Executive Chairman of Oilserv Ltd and Frazimex Ltd among others is a serial entrepreneur and graduate of Electronics and Electrical Engineering from the University of Ile-Ife.

In this interview with Energy Editors at the just concluded Offshore Technology Conference, OTC, in Houston, Texas, Okwuosa spoke on the OB3 and AKK projects, factors inhibiting the movement of indigenous companies into deep-water terrain among other issues. UGOCHUKWU AMADI was there. Excepts

How do you see and ensure collaboration among indigenous players add value in oil & gas sector?

There is serious need for collaboration among service firms to stimulate investment opportunities and address funding challenges in the sector. Collaboration between oil and gas operators and service companies would enhance sustainable growth and economic development of the country .Honestly the industry stands to benefit from one another through effective collaboration. This will ease the difficulty associated with investment and ease operators’ reliance on government funding. A well-designed collaboration is therefore necessary to speed up economic recovery and competitiveness in the industry. It is the Nigerian factor that everyone wants to do things in his own way and it is not the way to go. It is about understanding that the way to create value requires working together and not as an individual.

We have been adding value but not the level we desire. So the way we can achieve this is by collaborating and synergizing between entities like PETAN and all PETAN members and be able to handle bigger scope and compete with international service providers.

Why is there no such collaboration at the moment?

It is the Nigerian factor. Everyone wants to do things in his own way and it is not the way to go. If you go to houses with 20 flats. Instead of one tenant providing energy and everyone connects to it, you will see everybody with his own generator. It is a Nigerian factor. It is about understanding that the way to create value requires working together and not as an individual and we are going to get there.

How do you access the opportunities in the oil and gas sector for indigenous companies?

The Nation’s oil and gas industry has come a long way. Obviously, oil industry continues to be relevant, continues to drive the economy of Nigeria, but not quite as much as we expected in terms of integration into the Nigerian economy as far as GDP contribution to the economy is concerned. There are many structured manners that can be put in place to be able to achieve that. What is important is that available opportunities in services, whether it is in deep offshore or land or swamps, less than 20 per cent of that is touched today in terms of value. so, the opportunities are huge. That is what I can say.

What would you consider as some of the inhibiting factors to the movement of indigenous companies into deep-water terrain?

We are already operating in that terrain in reality. When you say deepwater operation, you look at it from two different points of views. Are you looking at Exploration and Production (E&P) which is ownership or are you looking at services. I will talk from services point of view. Nigerians have been participating in services in Bonga, Akpo, Usan. All these have had Nigerians’ input. There are two key issues with participation in deep-water arena. It is about technology and capital. Both will take time normally to scale up. Nigerians are participating but we only scathing the surface, there is still more opportunity for participation. Now, how do we increase that? We require to assemble capacity and integrate that capacity by working together in other to have synergy and be able to deal with bigger scope. But we are in the integration of FPSO (Floating, Production, Storage and Offloading which is the issue of topsides. Nigerians are in drilling, pipelines, flow-risers. We are doing a lot but it is very competitive and capital intensive and we have to slowly build it up as soon as we can because we have proven capacity but we need to do more because there is so much out there.

OB3 is a game changer and you are playing a key role in its delivery. How soon are we getting to the final stage and how does it feel with the impact of such strategic project that is going to change the way we deliver gas in Nigeria?

Let’s put OB3 in proper perspective, no pipeline has been built in Nigeria of that size or capacity. You may recollect that in the 1970s, 80s, and 90s, we had the likes of Wilbros and others but no Nigerian players in the pipeline industry. Look at our all pipeline infrastructure today, no where has 48” pipelines have been built. It is not about the pipeline, we have the Gas Treatment Plant (GTP) at Oben which is part of our scope. This is a GTP that is handling two billion standard cubic feet of gas per day (2bscuf/d). This has never existed anywhere in Africa. When we talk about OB3, it is not just about building a pipeline. Our own section, don’t forget there are two lots there. We are building LOTB that will take the gas from mid-point all the way to Oben plant plus the Oben plant itself. Now, our pipeline was finished three years ago, but the treatment plant took a longer time because the location was changed from Oben North to the GTP location and it took us two years to go through re-engineering it and getting the approval. But the story is clear, the pipeline and the GTP are going through pre-commissioning now on our own section. By September, our own lot would have been done, and I can only speak for Oilserv.

With the completion of your own lot, will it be operational without the other party completing its own section?

To some extent, no. But it depends on how the owner of the pipeline wants to use it. One thing you have to know the technicality is that we have a pipeline going to GTP Oben but we have a 36’ line we built from Oben GTP to Elps which is Oben Norh that is by-directional pipeline. Which means you can take gas from the GTP in Oben into Elps or take from Elps into GTP. So the answer is ‘Yes’ and ‘No”.

Yes, you can take gas from Elps into Oben into Ajaokuta when we commission it. But the other section cannot be completed except Lot A finishes to be able to evacuate gas all the way from all the way from Obiafor into Oben.

So at what stage is the AKK (Ajaokuta-Kaduna-Kano pipeline is a 614km-long natural gas pipeline) project?

AKK project is a very unique project, not just what it would achieve, which is to be able to move gas to northern part of Nigeria and create availability of energy to drive industries and create job opportunities. North does not have energy, unemployment continues, security problem continues, everybody will suffer. Secondly, AKK is significant because it is the first time such project of that magnitude is being done as EPC (Engineering, Procurement and Construction) and Finance. It is not like the previous projects where NNPC and other IOCs award you a project and pay for it and you go ahead and execute and collect your money. We are providing the money and to provide such amount of money, the total value of that projects for the two lots comes to $2.8billion. This is not a kind of money you raise in Nigeria, you have to go and raise that capital outside and for you to raise it, you need security. That security instrument is a process and part of it requires the federal government come in.

For instance, if you are backing up the financing with the tariff you will rise form that pipeline, don’t forget that most of that tariff for example will be in naira. A financier who is overseas doesn’t know what you are talking about in naira. So you have to provide an instrument of convertibility that has to come form the Central Bank of Nigeria (CBN) guaranteed that every collection in naira will be immediately converted to dollars. That’s a typical instrument, these things take time to get through the government agencies. So, we are going through that process and we are almost there. We have almost finalized the security and we have also started with the engineering. As we speak, the AKK has started, that is the point I’m making.

How is the spate of kidnapping and insecurity in the North affecting the project?

We are Nigerians, if there is kidnapping, we will deal with it. You are not going to stop developing Nigeria because there is kidnapping. In construction, we are tested and we are knowledgeable. We worked 100 per cent between 2002 to 2007 when kidnapping was the norm in the Niger Delta. Oilserv remained there. We worked in the swamps, maintained all the pipelines, so there are ways to do that. We are Nigerians, we work in Nigeria and we must create capacity in Nigeria. That is not going to be an impediment at all. It is a concern, but we have procedures to deal with that.

What is your opinion in incorporating technology in your operations because as you can see, technology is taking the lead in oil and gas operations?

We are already incorporating technology in our operations. Many years ago, you could not find any Nigerian company doing horizontal directional drilling. You would have had to go abroad for people to come and do it. We have deployed that. We have been able to cross rivers with 48” pipeline which would mean drilling and opening the line to 64” which is a major challenge because it collapses a lot. We are encouraging technology a lot.

There have been talks about roles of robots in deep water operation, do you think that is possible in Nigeria?

Anything is possible but what we should be asking ourselves is that how do we put that side by side with the Nigerian initiative and benefits. if you take robotics totally the way you have seen it by displaying human capital, what happens to our economy. I won’t say it is not in our own interest to deploy that, and I wont say you can stop that. You can’t stop moving train, you would have to realize that overtime, that may become the norm but what you do you, you start to train people to develop such, you start to train people because somebody has to manage that. You will create a different skill to be able to drive that but you cannot completely take out the human interface.

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