By Adewale Sanyaolu
THE East-West pipeline, popularly called Obiafu, Obrikom, Oben (OB3) gas pipeline, will change the face of power generation in the country when it finally comes on stream in 2017.
The OB3 gas pipeline, which is an initiative of the Federal Government to solve part of the perennial problem of gas evacuation to power plants, upon completion and at peak supply, will inject a maximum of two billion standard cubic feet (scf) from the current 1.5 billion scf of gas to aid power generation.
Former President, Petroleum Technology Association of Nigeria (PETAN) and Managing Director of Oilserv Limited, one of the companies involved in the construction of the 48-inch pipeline, covering about 120km and supply gas to thermal power plants, Mr. Emeka Okwuosa, in an interview with Daily Sun at the Oil Technology Conference (OTC), which ended recently in Houston, Texas, USA, explained that the project would supply gas to power plants within the Niger Delta region and beyond.
Current state of East-West pipeline
The East West gas pipeline project is ongoing and we are looking at its completion in 2017. The scheduled completion is July 2017. The project has faced quite a few challenges like you will expect of any project. Projects come with plans, based on scope and as you progress with them, you may have changes in scope depending on what you intend to achieve. We also have challenges that come with community management and security issues. We also have several other challenges but at the end of it all, we have to reduce the recalibration of the schedule. Currently, we are looking at July 2017.
In terms of how it is being affected by the current situation in oil and gas industry, not really because this is a gas pipeline and I know there is a focus to try and get gas distribution in top gear and this means clearly that this has been programmed over time and the funding is also being kept up by the Nigerian National Petroleum Corporation (NNPC) and the Federal Government. So, clearly, the funding is on stream and I believe by next year, we should have that pipeline fully functional to be able to increase the capacity of gas supply for domestic uses.
Gas pipeline capacity
At peak supply, we are looking at maximum of two billion standard cubic feet (scf) of gas. Whether you achieve that or not depends on whether you have enough gas to feed it.
Measures against pipeline vandalism
Pipelines are built based on what is called ‘engineering codes.’ And these codes determine the way you scope the project, the way you scope the specifications of the projects and once the clients do that, our job is to build to that specification.
There are many ways to secure a pipeline but the most important way to secure a pipeline is the engagement of stakeholders including the government, the community and all manners of people that have direct impact on the pipeline.
There are various forms of technology such as the defiled optic system that’s not being installed in the pipeline because it wasn’t part of the original scope. But what we have to know is that anybody that is tampering with a gas pipeline is a clear saboteur.
So the incidence of gas pipeline vandalism is such that is normal and not usual. Whenever it happens, it means that whoever that has gone up to vandalise the pipeline cannot be easily stopped because it is an act of sabotage.
Coping with low oil price
Exploration and production are parts of the whole package. We started with construction, expanded it into full Engineering, Procurement and Construction (EPC). With that, we consolidated our activities and we have been able to build capacity.
Oilserv is the first indigenous company to go into full EPC. After that, we moved onto gas development, exploration and production. The whole idea is to have a balanced portfolio and be able to de-risk the business.
Now, oil price is low but then people will have to understand that oil price has never remained low or high. It is a cycle that has been going on for decades and for those who deeply understand the oil industry, you have to be able to read the cycle and know when to gauge. Oil price is low, the reality today is that this is the best time to invest because you can price low. The main challenge is that you may not find the money to invest. We have gone into exploration and production to be able to gauge.
Right now, exploration is more difficult because it is difficult to go out and drill and spend money on exploration with low oil price. You can still do it if you can get the services with reduced cost, which is what is going on today. You can get into production asset where you optimise production, reduce your costs and be able to produce at a rate below $30 per barrel, manage until the price goes up.
Diversification into downstream sector
I mentioned earlier that we have moved into other business areas in other to de-risk our business. Do not forget that Oilserv started activities in 1995, so, we have come quite a long way. This year will make it 21 years and you say we have matured.
Five years is enough for you not only to strategise but also to try the strategy and be able to fine-tune it. We have done this and where we are today is that we have actually integrated and adapted to the situation. As we speak, we are undergoing massive strategy session to reposition ourselves to be able to work and determine the area to pay more attention to in medium term.
Long-term strategy, we have it all there. But long-term, you have to twist from time to time to meet up with the short-term and medium-term results. It is a matter of planning, understanding the industry and not be a company that comes into the industry and do just trading.
So, if you look at refining and refinery, that is a different business. We do not intend to get into that. The only way we can get into the refining and refinery business would be to basically do modular refinery in other to utilise the production we may have going forward if we do not want to evacuate the crude rather turn that into product and be able to use the product within the country.
All these things are not required within the present predicament. But right now, we have not decided to go into refining. We must create the right value with the right strategy to go into it.
Frustrations in accessing Nigeria Content Fund (NCF)
The NCF is a major issue because some of us in PETAN, who fought so hard with other stakeholders to be able to set up the Nigerian Content Development Monitoring Board (NCDMB) based on Local Content Act, feel some of the aims are not being achieved as of now.
It may be too early to judge but some of the directions we are seeing, we need to make sure that some of them are looked into and corrected. We are slowly building up a stanch of fund that is being taken off from us. When I say us, I’m looking at service providers and the producers.
The purpose of that fund is very clear. It is for capacity building. But how the fund is being deployed today is not clear to any of us. We all need to come together and look at it and make sure that this fund is being deployed properly to build capacity.
Capacity is not for one person; it is for the nation. We have to make sure the oil and gas industry positively rubs off on the economy of the country. How to do that is to continue to boost capacity, to provide jobs, grow the Nigerian participation in the exploration and distribution of oil and gas sector, and that is the only way. The fund is a major ingredient and for me, I don’t see the direction of the fund and it is a major issue.
Correcting the anomaly
It is still at the early stages because, don’t forget, this law has been in place for just six years, so, in terms of practice, we are still coming to deal with it and we are taking it up as an organisation to address it with the NCDMB.
And where that does not yield the result, we will take it up at another level because NCDMB reports to somebody and there is a system, but we have to make sure that clearly, NCDMB manages the situation in a way that will address the original reason for which it is set up.
Claims that some PETAN members have accessed NCF
Let me tell you, it is like saying that you have $1 million of fund and somebody accesses one cent; that’s not access as far as I’m concerned. Not more than one or two companies have accessed the fund at a very low level. When I say low level, I mean extremely low level because that kind of fund doesn’t do a project for companies such as Oilserv. So, we can’t even go for it because it doesn’t make any sense to us.