Emeka Okwuosa took time off his busy schedule to address a press conference shortly after the PETAN lecture/lunch at the Offshore Technology Conference, OTC, in Houston, Texas, in May. Maureen Chigbo, Editor, Realnews, was at the conference. Excerpts:
Okwuosa: OILSERV is a group of companies that are tailored towards (1) service industry of the oil and gas. (2) exploration and production activities in the oil and gas industry. These two companies grew up organically on the basis of my personal vision regarding development of the oil and gas industry in Nigeria following very good experience I had working internationally for close to 11 years, working for Schlumberger overseas. From 1993, I came back to Nigeria. I made up my mind based on the experience I have had that things have to change in Nigeria. And I, in conjunction with my colleagues, we started Petroleum Association of Nigeria, PETAN, with the sole purpose of developing local capacity in the oil and gas extraction from service provision to exploration and production. The good story is that today, after more than 20 years, we can beat our chest and say we have actually been able to achieve a lot but we haven’t gotten there because the target is still far away. If we have local content as a law today, some may not know that it took us 20 years fighting for it. After the first 15 years, the Nigerian National Petroleum Corporation, NNPC, did a very good job of setting up a sub-division within its group which, again luckily and incidentally, the GM at that time was the same Ernest Nwapa. And that is why when you see Ernest today in his position in NCDMB, it gives a lot of us joy because you see an individual who was involved from the beginning in getting to where we are today. That gives him the good background and opportunity to be able to drive the process because it is not about us. It is not me not about you. It is about how we create opportunities in Nigeria for the future of the country. And when we talk of the future of the country, it is not a political statement. We are talking of individuals. How do we impact on the system and make sure that the extractive industry in the oil and gas is such as to retain most of the values within Nigeria? Moving forward, Oilserv, that is purely an EPC company with land and offshore capabilities. We build pipelines, we build flow lines. We build facilities associated with these pipelines from manifold stations, piggy stations, military stations, naval stations etc. Up to the 90s, we used to have a monopoly of a company called Wilbros. In Nigeria, they handled intricate activities like River crossings, laying pipelines in difficult places, making repairs and rehabilitation of major trunk lines. I can tell you that today, the scope of activities of Oilserv does far surpass what Wilbros used to do. You can look at it and give credit not to us but to the drive of Nigerians. Because when you talk of Oilserv, it is about building capacity and I can tell you that all the people working in the company are all Nigerians. These individuals, some left universities in the1990s, some early 2000, some came in as fresh graduates. Today, some of them are general managers. Some of them are managers. So you can see that Nigerians can do it if they are given the opportunity but you need to be trained; nobody should be asking to be spoon-fed. But what we are talking about is that you need credible capacity that can stand the test of time and be able to develop economic activity around it in such a way that we can actually take this out of Nigeria and say we can offer services elsewhere. Today, we are offering services outside Nigeria. So we move into other countries as experts or expatriate companies. Nobody would have thought about twenty years ago.
PETAN and Capacity Building
Okwuosa: One thing I want to clarify is that PETAN is an association of private companies. We do not represent government. What we do primarily is to come together and work together to increase capacity in technology-based activities in the oil and gas industry in such a way to create more value and be able to retain a lot of the value that will go through as far as extracting oil and gas is concerned.
Gas Development in the Country and the State of Brass and Ok LNG
Okwuosa: The Brass and OK LNG are in a condition of stillborn because we don’t know whether they are going forward or not. Nigeria has the capacity to build a lot of LNG… But I am not an apostle of LNG anyway. Because what does LNG represent. LNG is not much different from what you do with your crude oil. Take your crude oil and you sell to somebody and they use it to develop their place. What is more important to us in Nigeria is how we pipe gas all over Nigeria to enable us develop with our gas. That is most important. So, as a first option, we should have gas available to all Nigerians and not to outsiders because if we can create the value, money will come out of it and payment and payment will be received by the same IOC. So, it should be a conscious effort by the government through the Nigerian National Petroleum Corporation to drive home that. And I think that is what is planned. The issue is execution. So I will leave it at that.
The Execution of the Gas Master Plan:
Okwuosa: Don’t misunderstand me; it is being executed. What I am saying is that it should be executed faster because we are losing money by not executing it faster. What we are losing by not executing it faster is difficult to quantify. It depends on the model you use. But when you know that Nigeria, as we speak today, has the capacity to take and use as much as 5 billion standard cubic feet of gas a day, we can do that. When you look at that, you ask yourself what is the cost of gas? A thousand standard cubic feet of gas varies between $2 and $6 depending on where you sell it and where you transport it. So, if you use that calculation, you will see what you are losing per day in quote. But it is not that simple because one of the impediments of gas development is again the issue of commercialisation. If I own an oil and gas block, and you want to take my gas, there is a cost for me to produce that gas, clean it up and put it in a condition that you can buy it, that cost has to be covered by any commercial arrangement. If the commercial arrangement is not such as to encourage me to do that I will leave the gas there or burn it. That is the part of the problem we had dealing with the IOCs. They also need to have a clear case of being able to get value for what they have. It is not just the value of gas, the cost of processing and moving this gas must be covered. If they cannot cover it, why are they going to get into it? So, it should be a win-win situation and that’s where we are moving to and I believe there is a commercial framework for that.
Nanotechnology and its Relevance to the Oil and Gas Sector
Okwuosa: it is not being used at the moment. Nanotechnology is more futuristic as far as Nigeria is concerned, but nanotechnology internationally is already being used in manufacturing, oil and gas, rail system and many other issues. In oil and gas where it has relevance – in production and use of machinery, in processes like filtration, your mud systems for drilling , the way you have your materials that will better serve you both in piping, pipelines, in many aspects. Nigeria is not committed as it is required to developing nanotechnology. It requires a conscious effort by the government through the universities and the universities to go through a structured funding to get it to a level where industries can key in and be able to source funding and develop specific solutions to specific problems. Nanotechnology is the future because with nanotechnology today, materials can be developed to do things that can appear like a miracle. An example is on health. You know clearly that in health today, more people die of cancer than get killed in accidents. Cancer comes in different forms and its spiking upwards for so many reasons. All the research done all over the world, the best effort in cancer detection and cure, is based on the manifestation of the cancer. Not so. It is only when it manifests one way or the other that you can say yes… But with nanotechnology, it’s been found out with research that you can actually implant a system in somebody that has no effect on that person, that will react in the person and let you know whether the person is susceptible to cancer in the next 20 years so that you take care of that ahead of time and not when the cancer has developed. As we speak now, the research is ongoing and it has gone beyond research; it is being practiced in the western world. Why can’t Nigeria take advantage of what is existing and help to develop that? These are things that I looked at and I said, I believe in developing capacity. And this is part of developing capacity that will eventually impact on oil and gas but goes beyond that.
Capacity Building and Training
Okwuosa: Oilserv believes in capacity development. You guys were there in the presentation today. You saw Lekan, the guy who runs Lake Oil. In 1992, when I was the recruitment coordinator of Schlumberger, I set up a programme (to give you a background) to develop our graduates in order to be able to pick the best. Schlumberger remains the best in terms of development of high capacity individuals. But we found that attrition rate, by this I mean that we hire 10 people in a year, within a year or two only two people will be left despite the brilliance of these individuals. Some may not be adapted to that kind of work. Some may be brilliant generally but may not be able to do the work. So, I set up a programme to change that and it worked very well. That programme required going to specific universities in Nigeria and looking at final year students in specific departments in Engneering, interacting with them and be able to feel their mindset and know the one with possible first class and second class upper that may be adaptable. At the end of it all, we may have about 20 – 30 and then we have through structured interviews one on one, written and then we narrow down and we pick up about four or five. Lekan was one of the guys I picked up at that time. To come back to what we are doing now. This same program Oilserv is implementing what is called graduate training programme. As I speak to you, in the current batch we have 14 of them who just commenced the programme a month ago. Because of the way youth service is structured now, we can take them before the youth service because they insist they must do national youth service first and during the service period, some states insist that they must teach only. They can’t work for companies. So we allow them to finish their National Youth Service Corps Scheme. We take them for a one-year training. At the end of one year, may be 60 percent of them will pass through. We take those that we need based on our work need. The rest we certify them to go to other companies. By that, you see individuals that are moving engineers moving in to work in the oil industry as junior engineers who have relevant experience and knowledge. We are doing that. We also have a skill acquisition system where we train people in skills like welding, fitting, operating of heavy duty equipment. We have been doing that for the past 10 – 12 years. It’s a yearly thing. We do it a lot for communities. And some companies we worked for have that kind of programme. Like Seven Energy, we are building 24-inch pipeline around Oron for them, 38 kilometres. As part of their programme they also have a development system for staff. We integrate into that and we get involved in that. We actually train people on behalf of Seven Energy. So, as I speak to you, we have those training programme at the level of graduate training and skill acquisition and it is on- going at the moment.
Funding and Pipeline Vandalism
Okwuosa: Funding is a key issue in capacity building. At the very early stage, it was very difficult because Nigerian Banks and funding institutions were not tailored to this kind of business. They were more tailored to importation of materials. In the early 90s, you went to them and you are talking about a contract they could only give you facility for three months not more and you don’t do these projects for three months. But today, we have gone beyond that. Funding is not really a major problem for us. The bottom line is that we have built the capacity where we have continuously performed. And what do banks want? They want to be sure that when they lend you money, that they can get it back with interest not stories that the project has failed. Oilserv and FRAZIMEX have never done any project that failed. In fact, before we start a project, banks have lined up to give us facilities. It is purely based on performance. So it may not be the same with other companies. It depends on the experiences of each. But really anywhere in the world, you have to understand that money is always available. It is the ability of matching money with what requires to be done. That process is the issue. But if you want to raise a billion dollars, you can raise a billion dollars so far that there is credibility in the process of utilisation. Secondly, the issue of pipeline vandalisation, of course, you know, is a major issue in Nigeria. There is a technology. The pipeline we are building as of now, the mid-western oil and the group around there, marginal field operators at Omasegege to Umugini we are building a one kilometer pipeline. Why I am mentioning this is this – there is a pioneering vandalisation detection system we are installing, the fibrotic system that you install as you lay the pipeline. That system is so sensitive that it can differentiate between somebody coming to dig, somebody working on top of it, somebody driving a car across. You can determine what is happening around that right of way and determine whether it is a threat to the pipeline and you have a control system and you have access to that control that you can go there immediately and take action. Such are technologies that you can deploy. There are other technologies that you can deploy to reduce the problem. We have to consciously do that and beyond that there has to be a massive investment in the existing pipelines to be able to stop pipeline vandalisation.
Staff Strength and Composition of Oilserv Employees
Okwuosa: I will start with the last one. Oilserv as a company employs more than 400 people. Why I cannot put a figure is because we have a number of projects we handle. By the nature of our projects, the number of staff I have today may differ from the number of staff I have in one week. It moves up and down but it varies between 400 and 500. That includes the staff we used on project sites but does not include the community-based staff because community based-staff are purely outside as you finish that project and you move to another community you drop those ones and pick from the next community, so those ones change a lot. So it’s moving target.
— Jun. 16, 2014 @ 01:00 GMT