EMEKA OKWUOSA is the Managing Director of Oilserv. In this interview with FRANK UZUEGBUNAM on the sideline of the 2019 Offshore Technology Conference (OTC) in Houston, US, Okwuosa talks about his company’s game-changing role in Obiafu-Obrikom-Oben (OB3) pipeline project, Ajaokuta-Abuja-Kaduna-Kano (AKK) gas pipeline, indigenous companies’ participation in deep-water amongst other issues. Excerpts:
Can you give an overview of Nigeria’s oil and gas industry?
Nigeria’s oil and gas industry has come a long way and it has continued to be relevant. It has also continued 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 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. The opportunities are huge.
OB3 pipeline project is a game changer and Oilserv is playing a key role in its delivery. How soon are we getting to the project delivery?
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 there was no Nigerian player in the pipeline industry.
Look at our all pipeline infrastructure today, nowhere has 48-inch pipeline been built. It is not only 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. There are two lots in 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.
We finished our pipeline 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. The technicality is that we have a pipeline going to GTP Oben but we have a 36-inch 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. 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 Obiafor into Oben.
What would you consider as some of the inhibiting factors to the movement of indigenous companies into deepwater 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 projects 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 are only scratching the surface. 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. 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.
So, how then do we ensure collaboration among the indigenous players?
We have been adding value but not at the level we desire. The way we can achieve more is by collaborating and synergizing between entities like PETAN and all PETAN members so that we 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 providing one source of 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 much of technology are you incorporating in your 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-inches 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, 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 displacing 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 cannot stop a moving train. You would have to realise that overtime, that may become the norm but what can you do? You start to train people because somebody has to manage that process. You will create a different skill set to drive that but you cannot completely take out the human interface.
At what stage is the AKK project?
The Ajaokuta-Abuja-Kaduna-Kano (AKK) Gas Pipeline is a very unique project, not only because of 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.
Remember, northern Nigeria does not have energy; unemployment continues, security problem continues and eventually, everybody will suffer.
AKK is significant because it is the first time a project of that magnitude is being done as EPC and finance.
It is not like other 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.
In the case of AKK, we are providing the money. This is not a kind of money you raise in Nigeria; the total value of the project for the two lots comes to $2.8billion. 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 coming in.
For instance, if you are backing up the financing with the tariff you will rise from that pipeline, do not forget that most of that tariff for example will be in naira. A financier who is overseas does not know what you are talking about in naira. So you have to provide an instrument of convertibility and that has to come from the CBN guarantee which entails that every collection in naira will be immediately converted to dollars. That is 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 finalised the security and we have also started with the engineering. As we speak, the AKK has started, that is the point I am making.
Do you anticipate the spate of kidnapping and insecurity in the north to affect 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.
Between 2002 and 2007 when kidnapping was the norm in the Niger Delta, Oilserv remained there 100 per cent. We worked in the swamps, maintained all the pipelines. We are Nigerians, we work in Nigeria and we must create capacity in Nigeria. Thus, insecurity is not going to be an impediment at all. It is a concern, but we have procedures to deal with that.
