Adewale Sanyaolu, Houston, Texas
The Federal Government’s desire to grow indigenous oil producers’ contribution to the national crude oil basket from the current 10 per cent to 30 per cent within the next five years may turn out a day dream without a collaboration between indigenous oil and gas producers and their counterparts in the service sector.
In this interview with select journalists on the sidelines of the just concluded Oil Technology Conference in Houston, Texas, USA, Chairman and Chief Executive Officer (CEO) of Oilserv Group, Engr. Emeka Okwuosa, said that synergy with oil and companies, including the Petroleum Technology Association of Nigeria (PETAN) members would enable them handle bigger projects and compete with international services providers.
He explained that, the participation of indigenous services providers in deepwater operation involves the right technology and huge capital outlay, lamenting that, services companies operating in this terrain are still scratching the surface. According to him, there is room and opportunity for more penetration.
He also gave some update on some of the Engineering Procurement and Construction (EPC) projects being handled by the company on behalf of the Nigerian National Petroleum Corporation (NNPC).
Excerpts.
Update on OB3 Pipeline Project
Let’s put Obiafu-Obrikom -Oben (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 player was present in the pipeline industry. Look at all our pipeline infrastructure today, nowhere has 48 inch pipeline been built. It is not about the gas pipeline alone, 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 (2bscf/d). This has never existed anywhere in Africa. When we talk about OB3, it is not just about building a pipeline.
Don’t forget that, there are two lots for our own section . We are building LOT B 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 the re-engineering process including getting the necessary approval.
But the story is clear, the pipeline and the GTP are going through pre-commissioning now for our own section. By September, our own lot would have been completed. That much I can only speak for Oilserv.
Would LOT B operate in isolation
To some extent, no. But it depends on how the owner of the pipeline wants to use it. One thing you have to understand about the technicality is that, we have a pipeline going to GTP Oben but we have another 36 inch line we built from Oben GTP to Elps which is Oben North 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”.
Again, you can take gas from Elps into Oben and 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 Obiafor into Oben.
And AKK project
AKK is Ajaokuta-Kaduna-Kano pipeline which is a 614km-long natural gas pipeline project. AKK 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, but if unemployment continues and security problem continues, everybody will suffer without gas in that axis.
Secondly, AKK is significant because it is the first time a 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 International Oil Company (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 project including two lots is about $2.8billion. This is not the kind of money you raise in Nigeria, you have to go and raise that capital offshore. And for you to raise it, you need security. That security instrument is a process and part of it requires the Federal Government to guarantee it.
For instance, if you are backing up the financing with the tariff you will charge from 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 from the Central Bank of Nigeria (CBN) guaranteed that every collection in naira will be immediately converted to dollars. That’s a typical instrument and 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 preliminary works. As we speak, the AKK project has started, that is the point I’m making.
Impact of insecurity on AKK 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.
Indigenous companies and deepwater operations
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 service point of view. Nigerian companies participated in service aspect for Bonga, Akpo, Usan. All these deepwater projects had Nigerians service providers input.
There are two key issues with participation in deepwater arena. It is about technology and capital. Both will take time normally to scale up. Nigerians are participating but we are only scathing the surface for now. There is still more opportunity for participation.
Now, how do we increase that? We need to assemble capacity and integrate that capacity by working together in order to have synergy and be able to deal with bigger scope projects. But we are in the integration of FPSO (Floating, Production, Storage and Offloading which is the configuration of topside modules.
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.
It is instructive to add that we have been adding value but not at the level we desire. So the way we can achieve this is by collaborating and synergizing between structured entities such as PETAN. By collaborating, PETAN members will be able to handle bigger projects and compete favorably with other international service providers.
The lack of collaboration among service providers is a Nigerian factor. Everyone wants to do things in his own way and it is not the best way to go.
Technology/robotics for oil, 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 inch pipeline which would mean drilling and opening the line to 64 inch which is a major challenge because it collapses a lot. We are encouraging technology a lot.
For robotics, 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 won’t say you can stop that. You can’t stop a moving train, you would have to realise 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.