Oil majors have in the past few years been divesting and relinquishing their assets to Nigeria’s oil companies. This development has breathed life into some indigenous firms across the value chain of the oil and gas sector.
In this exclusive interview, Eberechukwu Oji, CEO of ND Western examined the impact that asset sales by international oil companies (IOCs) are having on the industry, and how ND Western is raising funds for expansion. Dipo Oladehinde, Excerpts:
In recent years, many IOCs have sold off their assets in Nigeria, what does this portend for oil independents in the country?
It has been several decades since oil was discovered in Nigeria and I think it is safe to say the development is welcome and what we are witnessing is good for the country and Africa. Over 60 years of oil exploration in Nigeria suggests that the Nigerian independents are coming of age. There is no better time for us as a nation to realize that nobody is going to develop, not just our oil and gas resources, but our nation in terms of industrialization, capacity building, and financing than ourselves.
So, the responsibility to make sure that the next couple of years of our industry rests squarely on the shoulders of all the indigenous firms in the sector and I am positive that we have shown a capacity to improve on what IOCs have achieved.
After some indigenous companies acquired assets from the IOCs, where are we as a nation on in-country capacity building, how can we expand it to take full advantage of the regional development of Sub-Saharan Africa?
Indeed, many Nigerian firms that acquired assets from the IOCs have Nigerian CEOs; and Nigerian experts work with those companies, in most cases, almost nearing 100 percent.
However, what we have now found is that many of these gentlemen and ladies leading the companies were trained by the IOCs, including myself. We have many young professionals in the industry, some of them nearing 10 years of our existence but have no half-near capacity and development training as much as we have received when the IOCs held sway.
I was trained by Shell in practically almost all the key training centres around the world. Now, we have many young talents that need similar training. They must be well trained such that they optimally use their skills to develop their country and the continent of Africa.
The responsibility is on us now because they need much more than the industry needed at the time we were trained. Therefore, we need to train our young engineers much more in a higher technical capacity to be able to do the work that is needed now.
At ND Western, we are solving the problem. We have a good fortune inherited from Shell – a big training facility that Shell built and used to run Shell Intensive Training Program (SITP). We have committed ourselves to revive that program and are motivated to do this because we cannot find the kind of training we believe young technical professionals need now for the need of the industry today.
Read also: Nigeria’s oil output hits 13-month high of 1.3mbpd
As an independent and Nigeria-led oil firm, how have you fared in managing the assets acquired from the IOCs?
I would say ND Western is doing well and on the right track. We are the solution to the Sub-Saharan Africa energy need; we understand our problems in Africa better than non-Africans. The asset ND Western bought at 8,000 barrels is now approaching 30,000 barrels and by the end of this year, it will hit 40,000 barrels per day. On a gas line, we took it from 200. Now we are doing 350. By the end of this year, it will be 400, and next year it will be 600.
The pipelines we run are all delivering nearly 100 percent. What we put in is what we get out. The pipeline that ND Western runs in the West is about the only pipeline that is functional today, our loss on the worst month is 15 percent and on average is about 5 percent. So, when Nigerian run these things, we deliver fantastic outcomes from there. The ball is in our court, we must play the ball and play it right.
How is the firm positioning itself to maximize this opportunity for Sub-Saharan Africa and ensure a visible impact?
We are big on environmental, social, and governance (ESG) factors, and we demonstrate our dedication to opening more frontiers of visible impact across the region on many fronts. It may be acceptable for IOCs to do some kind of CSR projects here and there but we are committed to doing a lot more as indigenous companies knowing that we are here for long hauls and this is our home.
For us at ND Western, we conceived what we call Utorogu Industrial Project which is a 25km radius around the Utorogu Industrial Park. The project ensures we supply gas to all plants anywhere 25km radius of the location of our plant. This has changed quite significantly the composition of what is happening in the Niger Delta. Our ESG project implies that the gas produced from Niger Delta should be used to industrialise the Niger Delta and there is a significant industrial footprint already in that corridor.
You have benefitted from the Nigerian Local Content Policy. in what ways are you leveraging this to support indigenous vendors?
The most important thing to say about Local Content is that we are local content. ND Western gives out an average of 400 contracts within two to three years to local Nigerian companies. It is only by exception that our contracts go to foreign companies. It is a great credit to Nigerian companies that almost all the services we need we can find a Nigerian company that can provide them.
However, we need to have a good conversation that is key to our future. And that is around now that some of the projects we are undertaking are taking us up the value chain. For instance, we are building a refinery, and we have some of the refining columns that are welded overseas. We should have a conversation that for all these new refineries that are coming, we should be welding those columns in Nigeria. I don’t see anything complicated when I go to the yard where these columns are welded, it is a challenge to Nigerian service companies that if you can weld these columns and put the right Quality Assurance & Control around them and certify them, we will purchase these columns.
We will patronize you. The same thing is applicable to the upstream. I believe we are at the point where we should be building and completing floating production storage and offloading (FPSO) not just completing them here. We are at that point and the truth is that we can get together in a massive collaboration to build something that works for all of us.
We can make the fabrication in-country and remove all the huge costs that go into getting welders. We can do all that in Nigeria and significantly cut down the cost of production while also building the county’s economy. We need to have a serious conversation about Nigerian problems being solved by Nigerian people who are driving and paying for these services. We at ND Western want to see Nigeria rise to deliver the goods that we do need at this time.
Funding is a major challenge for a capital-intensive venture like oil and gas. What are some of the financing bottlenecks faced as an independent and how are these challenges being managed?
Funding is always an issue and as pointed out in the question, investors are key to our operations. However, the world especially is hungry for gas, and investors would pitch their tent around firms that have proven capacity and showed commitment to global best practices.
ND Western consistently upholds standards within its value chain and this underscores the reason we are leading in the sector. ROI is fundamental to investors and they will stop at nothing to put their money into a sustainable venture that will most likely give them good returns.
There is no one-size-fits-all approach to financing challenges but what works is a show of excellence and that is one of the pillars that drive ND Western operations.
However, about two years ago, we were close to being defunded when the Russia-Ukraine war happened and many funding agencies began to sing a different song. I don’t know how long that silver of opportunities is going to last but it is incumbent on us to do everything possible.
This is the time to bring projects that need to be brought to the final investment decision (FID) because that window of opportunity is there. The world is hungry for gas and we have an abundance of those gas here. So, regarding projects we have packed over the years, I think this is the time to have strong conversations about bringing them to the table. But it will require a lot of ingenuity and creativity to make the projects bankable and to make the world a better place as far as the ESG is concerned.
Do you see collaboration among NOCs as an effective approach to tackling energy needs in Africa?
With collaboration, the African continent and in extension, our world will be a better place. According to a proverbial saying: “if you want to go far, go together,” things are done faster and better with contributions from different independent sources.
ND Western explores collaboration opportunities with NOCs and other stakeholders in the industry to deliver quality services on time. During Q2 2022, the commissioning of a medical diagnostic facility called DeltaPlus Diagnostics in Ogunu, Warri, Delta State was made possible through a collaboration with Nigerian Petroleum Development Company Limited, a subsidiary of the Nigerian National Petroleum Company Limited. The medical facility is a corporate social initiative of the Independent Petroleum Producers Group.
Similarly in May last year, we signed a Gas Infrastructure Development Agreement with the Lagos Free Trade Zone in partnership with Falcon Corporation Limited and First Hydrocarbon Nigeria. The three companies together (Optimera Energy FZE) sealed the deal as a consortium to play a major part in Nigeria’s energy transition with a particular focus on developing gas distribution networks. We also joined hands with NEPL, a subsidiary of NNPCL through the NEPL/NDW OML 34 JV Asset Management Team in the development of the 10,000 barrel-per-day mini refinery, which is currently in the FID stage.
