There have been concerns about the financing of the Abuja-Kaduna-Kano pipelines after reports revealed setbacks in securing Chinese funding. In this interview with Isaac Anyaogu and other energy reporters, Emeka Okwuosa, Group CEO and chairman of Oil Serv, a major contractor on the project clarifies that the pipeline project is proceeding according to plans and gives insight on the oil servicing industry.
Give us a brief assessment of the oil services industry as well your company’s expansion plans?
The oil and gas sector has come a long way and what it means is that we have a more robust industry now and far more participation of Nigerians across board, across that industry which includes exploration and production, service delivery, financial services, and so on.
We have a more robust industry today than what we had previously and it continues to grow since the enactment of the Nigerian Oil and Gas Industry Content (NOGIC) Act which drives the local content capacity building and the activities of the NCDMB in managing local content activities.
I can say they have actually done a lot and are still doing more to build capacity, as you can see the capacities in the service industry have improved tremendously, because the service industry is the most important in the oil and gas industry.
Enhancing the service industry is how you trickle down values in the industry to the economy of a country. So, a robust service industry means that a lot of the value is in basically developing and operating oil and gas facilities, and gas assets are domiciled within the country. Remember, it’s not just about the ownership of these assets, it’s about the services rendered as you develop these assets and you keep running these assets.
The coming of the Petroleum Industry Act has helped. It is being operationalised and you can now see the NNPC has transmitted to NNPC Limited. This has implications for the E&P industry as well as the service industry. So the bottom line is the industry is getting more robust as we are adapting to best practices and to changes in the world reflected around E.S.G requirements.
There are concerns about funding constraints facing the AKK pipeline projects, with some saying the Chinese financing is no longer certain, what exactly is the situation and when is the project going to be completed?
The AKK project is a very crucial project and the importance is underpinned by the fact that for us to develop as a country we need energy and the most abundant source of energy to Nigeria is gas. Fortunately for us, we have a lot of gas reserves in the country.
But gas is meaningless if you cannot produce and transport it. Transportation is critical because you cannot easily store gas, you need to move it from the point of production to where it would be used, match availability with utilisation.
So the AKK pipeline project is a major part of the Nigerian Gas Master Plan, the backbone of the gas transmission system. We have gone pretty far as the execution of the project is concerned. The AKK will be delivered this year as work is fully ongoing and we are working closely with NNPCL as the client to have it delivered.
The project is based on a build and transfer model. This means that the funding comes from a partner. China was approached, negotiations were made, and NNPCL and the Federal Government met all the conditions to be able to secure the loan.
Unfortunately, as we speak, nothing has come out of that, in terms of what China would bring. I am not in a position to say why, but all I can say is that all the requirements from us as a contractor to the NNPCL have been met. The Federal Government has provided a sovereign guarantee which the president signed and made available, everything needed by Nigeria was done.
Irrespective of that, NNPCL has moved in to make sure that funding does not create a problem for the project. NNPCL has been funding this project from inception to navigate the negative impact of the non-availability of funding from China.
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Do you think the expected project completion target is still feasible?
As stated earlier, the project is going to be completed before the end of 2023, the project is ongoing and of course, we have had our fair share of setbacks, the most difficult was the COVID-19 pandemic which impacted so much on the project.
If you remember, there was a total lockdown from March to September of 2020 and that impacted the project. Thereafter the restriction of movements and travels also affected the project. Also. the huge flooding that happened in the last rainy season, cut off a lot of places where work was ongoing. It took about three months of flooding before we could resume work in some areas, we couldn’t have access until December last year because of the flood.
We are not also oblivious to the coming elections and we are doing everything possible so that it won’t impact the successful project completion. Of course, we know a few days before the election we will not be able to work because of the restriction of movement so we are doing everything to mitigate it.
Security remains key in the execution of pipeline infrastructure, how are you dealing with it?
Well, security challenges like many other challenges are things we have to live with it in our country. Every country has got one challenge and Nigeria is no different.
We cannot wish away the security challenges, of course, I am aware that the Federal Government, business operators, and individuals are all doing a lot to find a way out of these security challenges and we are hopeful that as we keep developing our democratic system we will overtime reduce the occurrence and incidence of insecurity.
But as of today, we live with it and we have to find ways to mitigate it as well as find ways of living our lives irrespective of what I can call the setbacks of this occurrence.
So, in the industry, we have methods and ways to mitigate the issues by working with security agencies and stakeholders of all manners to be able to continue executing and delivering our project even with these constraints.
Don’t forget that in pipeline construction you are exposed a lot to the vicissitude of the environment because you go through every inch of the space by building the pipeline which means you are exposed to everything, not only security but to all manner of issues. But we will deal with this because we have a methodology to work with.
How can we utilise and maximise gas for our transition energy?
Well, it is said right that gas is what we call transition energy. Gas is in a position to enable us to meet some of the requirements of the framework of the environmental target. In Sub-Saharan Africa and the developing world, you need gas to be able to develop because our needs are different from the developed world. With that, we have to adapt and that is why we are keeping in mind the requirements of the E.S.G targets. now,
What is your assessment of Nigeria’s commitment to gas industry expansion? What can the private sector do to enhance its growth?
Private sector involvement is key for any industrial development. Don’t forget that we have all decided that as far as the economy model is concerned that is what we are practicing in Nigeria.
What it means is that private participation has to be involved in the market, industrial development, and economic development which is how you build capacity.
The gas industry already has a lot of private participation from the building of the infrastructure to developing the capacity for utilization of this gas. In terms of utilisation, we are talking of gas-based industries of all sorts from a power plant to basic industries that use gas to fire the boilers to generate heat. So, the bottom line is, private sector participation is making a lot of difference in capacity building and that will continue to make a whole lot of difference.
Nigeria today is seeing a lot of participation of the private sector in the gas industry and that will keep increasing for the foreseeable future.
