By Adewale Sanyaolu
Managing Director and Chief Executive Officer (CEO) Oilserv Limited, Mr. Emeka Okwuosa, is one of Nigeria’s most vibrant entreprenuers who is seriously committed to developing local content in the oil and gas industry, agriculture and other key sectors of the economy. He spoke with Daily Sun at the 2017 edition of the Offshore Technology Conference in Houston, Texas, USA, where he advised promoters of projects to make concerted efforts towards reducing the tendering process to six months in line with global standards.
He equally spoke on the efforts of Transpower – a subsidiary of Oilserv Group involved in the business of gas – to help the country solve part of its power challenges through the Micro-Ornano Liquefied Natural Gas (LNG) system in a bid to reduce the cost of doing business.
Excerpts:
Your thoughts on tendering process in Nigeria
The inability of projects owners to reduce turnaround time for contracts, especially tendering process, has become a source of worry to players in the oil and gas industry. In Nigeria, tendering process sometimes takes up to two years, thus making operators incur additional cost as arising from inflation and in the end, some get frustrated and abandon the project.
Prolonged tendering
I’m not sure that it is the government; I think it has to do with owners of the projects. Whether it is the Nigerian National Petroleum Corporation (NNPC) or the International Oil Companies (IOCs), which, in this case, you have the National Petroleum Investment Management Services (NAPIMS) being the major partner that controls things.
For me, it is about making conscious effort to put up a process that’s fit for purpose. When you start a tender and the tendering process goes beyond six months, you are in a different territory. You have a situation where inflation may have changed and prices may have changed. Some tendering processes take up to 18 months. That should end; it requires concerted efforts.
We have heard NAPIMS say they will look at that and correct it. We have equally heard the Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, say that such prolonged tendering process must end in the oil and gas sector. There is need for concerted efforts to streamline the process of tendering and make sure that the tendering and contract cycle time frame is within a shorter time and that requires a directive from the Minister, which is then cascaded down to every party involved in the process.
Assessment of OTC 2017
It was a successful outing. The participation of the Nigerian contingent is as strong as it can be. Generally, you can see that activities this year still appear a bit diminishing in terms of number of people but the Nigerian participation is as strong as ever and I believe it was very successful. More so, with Kachikwu appearing in person, it gives it more credence and puts it in the right direction.
Opportunities in Nigeria’s participation
The opportunities are immense. The Minister enumerated these opportunities and mentioned the seven big wins. You can see that opportunities exist along the entire value chain from the upstream, to midstream and to downstream. If you take the midstream, that is gas development as an example, the opportunities are from gas processing facilities to production and distribution of LPG, production of lean gas and pushing it out for power generation. This is a huge industry on its own. You heard him talk about modular refineries, these are opportunities.
Update on the OB3 project
Oilserv has always been proactive. That’s why we moved from being just a construction company in 1995 to being a company that has activities across the value chain. Today, we are a group that has six different companies from pipeline construction, engineering construction commissioning down to full engineering from feasibility study, front-end engineering, detail engineering and so on.
We have been proactive in looking out for these opportunities and taking advantage of them. Today, when you talk of refining, we are positioned to take advantage of that because we have already moved ahead of that. You may wish to know that we did not set up bearing in mind that there will be local content law.
Oilserv has built capacity prior to that purely by continuing to invest and developing resources including human resource base. So, the point is that we are very well prepared to take advantage across the value chain. OB3 project is towards the end of completion. What we are doing is thermal station. The pipeline itself is completed and we are going through its pre-commissioning. Thermal station poses its own challenge because we have to realise that these stations are huge. For you to build a gas metering system for a 48-inch diameter pipeline, lots of people don’t understand what it means. A pipeline you are building to have a throughput of two billion standard cubic feet (scuf) of gas per day, that means for you to build a metering system to take this, in engineering parlance, you cannot build a single system. We are to have four streams of 500 million scuf per day.
That pipeline will have four sections where we will have different metering and connection systems to be able to take it and utilise; that’s exactly what we are doing. We believe that by the end of this year, that will be finished.
Incentives for those interested in modular refineries
It depends on the model. From what I have heard so far, the model is not yet out. It’s only when they come up with a model that we will look at it and examine how they will guarantee finances, fixed stock, off-take and all these will come into the model we are expecting from the government. So, we have heard a policy statement but until they come up with a blueprint, for now, I can’t comment.
Plans for gas-to-power
We have a company called TransPower. It’s a gas to power company from gas development to power generation. But the power we are talking about is not the power system connected to the grid. We are involved in the distributed off-grid power systems where we develop the gas transportation system. If you don’t have a pipeline, we do a virtual pipeline system where we use Compressed Natural Gas (CNG) or we use Micro-Ornano LNG system. Now the clear thing is that we target end users. We store the power, run it and supply the gas. That’s our model. Our model isn’t that one that will be embedded into the grid.
As we speak, we are at a stage where we are developing working relations with operators in the Oil Mining License (OML) 56, which include about four or five companies. We are at a stage where we are trying to collect the gas, process and utilise; that is the first step. We already have Nano technology system where we have a project we are working on with an Argentine company. This is a process; from the day you have your strategy and put it on the ground, it takes at least two years. Let’s be clear, this is real work and not talk. The process is a process. First, you have to sign a gas-purchase agreement with gas owners and you build the processing system. From the processing cycles you take the lean gas then you now deliver. The power plant is the simplest thing; you buy the power plant then you install. The process of getting the gas there is the most difficult.
Local content in oil and gas industry
A lot has been achieved in seven years. The first is the setting up of an agency to manage the policy and that is the Nigerian Content Development and Monitoring Board (NCDMB). You will agree with me that it takes time to build an institution that will stand the test of time.
But I believe that with time, they will settle very well. They have the capacity to certify companies to ensure they comply with the law. They have resources in place to encourage companies to have capacities to be able to be compliant to the local content policy. They have many other processes in place to encourage training. My assessment is that they have achieved quite well but there is enough room for development. That’s why I mentioned earlier that I’m one of those that believe that NCDMB has come a long way and they are moving, not gotten to their target but still have a long way to go. It makes a difference to have strong leadership who will make a difference. Listening to the executive secretary, not just what he says but what he does, I will say I’m encouraged. Local content management is going in the right direction.
Lack of access to Nigerian Content Intervention Fund by PETAN members
What has changed is that we have an Executive Secretary at NCDMB who recently took over the position and is very interested in addressing the issue. He has said it and he’s doing something about it. This is because everyday that goes by, the fund keeps building up. The primary aim of that fund should be capacity building. So, there are many ways you can deploy that fund to support capacity building.
You can provide funding at an affordable rate for Nigerian companies that are investing. This is not money to be thrown away but returned. You can also have an NCDMB that can be involved in development of key sector like pipe mills.
NCIF vis a vis transparency
I believe I’m not comfortable but we have to bear something in mind that we should not over criticise. I believe there are records and these records are available. I don’t believe they have no records. This money accumulates based on records. Do not forget that NCDMB is also a young entity that’s learning and developing its system. We have to give them time to do that. What is happening right now is that NCDMB is managed by very competent people with good knowledge of best international practices. You cannot compare it with NNPC. I believe we have to give them time because I believe they are doing the right thing.
Project 100
Project 100 is a very good idea because some of us have been saying this in different ways. Some of us that have built capacity all the years have to be sure that it will be utilised. If I have capacity based on $100 million lying there and maintaining these equipment, I’m employing people and don’t have jobs for them, how does it work? There has to be a process of guaranteeing jobs for companies that have invested.