Ken Etete is animated and passionate about his business. An accountant who pivoted into oil and gas services, he considers the Local Content Act as one of the best things to happen to the industry. In this interview with Bala Augie, he talks about the industry, where it is and where it has come from.
Most people consider Century Group a Local Content Champion especially in the light of the Local Content Act being a boon for local oil servicing companies in Nigeria. How has it impacted Century in terms of building capacity and grabbing a larger piece of the pie hitherto open to indigenous players in the ecosystem?
One of the best things that has happened in the past few years is the Local Content Act as a follow-up of the moral obligation on the part of the government. Since after the law, the execution has been a different tactic now. Over the years, the momentum has been building and it is at this moment, at an all-time high. For us at Century, it was a clear case of preparation meeting opportunity. We had already been pushing for it, and doing things. Now, we have a law backing us and a regulator that is effectively discharging that role, to ensure that those companies that have the resource capacity will have full benefit.
Local content has clearly created a barrier for foreign companies to come into certain areas. Automatically, this gives us more opportunity to do those things. That has basically created an incentive for us, because why would you be building, if you have a competitor with better skill set. Local Content Law basically protects you and prevents any other company that is not Nigeria oriented in certain categories. It creates a bigger incentive. That is not to say the Local Content provides an opportunity for people to just over bill an international company. That is not the case. It is just a deliberate attempt to ensure that Nigerian companies are given first right of execution except the Nigerian companies are not able to, or do not have the capacity to. International companies are encouraged to support the Nigerian companies.
First we had the Cabotage Act then the Local Content Act and now the PIB is heating up. What does it portend for O&G players like Century?
Basically, this just means that the industry is becoming more private and efficient. So for oil and gas players, it goes back to capacity and efficiency; less government involvement and more opportunities will be out for privately owned businesses. It is a win-win situation for the tax-man and the citizens because they both get more money. There are a lot of stakeholders that
need to be catered for, and hopefully, that will reduce the tension in the market. Cabotage is there to ensure that local companies are participating in the shipping industry, Local Content, the same. Hence, PIB is putting all of these dynamics into a law that is now enforceable.
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Century supports both IOCS and NOCS. How did Century manage to gain the confidence of both big and small players?
Quite early into the 2000s, before I came to Century, I had gained experience in executing and selling projects for field development with FPSO Concept while working for Bluewater. It became obvious that for policy reasons, Bluewater was not too keen on taking on some of the risky project as it were, and this triggered my creative ability. I realized that like today, there were numerous opportunities as well as a number of struggling entrepreneurs who needed support.
I took up the role of CEO at Century by the end of 2007, and this gave me the ability to take on the risky projects often dodged by international service providers. This led to the birth of the international joint venture with Bumi Armada leading to Century-bumi Armada to deliver the first FPSO for AMNI/AFREM on the Okono field. That gave us the opportunity to do a lot more and work for companies like Suntera to provide them with drilling support, procurement of drilling materials, logistics, and what have you.
While working with companies like Chevron, Total, and Conoil, we took on the FPSO for NPDC after competing with international service providers like Saipem in early 2009, and took over the project in 2010. This process emboldened us to take up more opportunities. We struck a deal with Shell to run Kidney Island which was an abandoned facility. Having provided services for about 8 years, we were becoming a major force in supporting field development and production operations; the opportunity was there, as well as sufficient manpower. We could easily fill them in and create an inspiration for young entrepreneurs to emulate what we were doing in the area of marine support, manpower and, similar areas.
How did an accountant end up leading one of Nigeria’s biggest oil servicing company and a bonafide local content champion?
Like everything, leadership is partly innate, partly determination and vision. I have been involved in oil and gas activities straight from university especially the commercial side of the oil and gas play. Of course, with a decent understanding of the technicalities involved. It is a passion, and I am also fortunate I got early exposure to this. I have had several tutors who taught me, and I have made myself available to be taught. It is an on-going process and my education was really to prepare me to understand how to make decisions and how to analyse things. Most of the others are innate.
I have always wanted to provide value, identify problems and proffer solutions…so, it is what it is. Still, it is a privilege because they’re so many people who know better than me with dedication and the readiness to work, but they might have not been as fortunate as I was. There is not much I can say, seeing as it is not because I am all super that I got here. It is simply grace.
I have never been a kid waiting for my parents to provide for me. Besides, I am from a middle class family and of course, a large family. I have been parented by biological parents, a lot of uncles, aunties, and external family relations – courtesy of being African. But for most of my teenage years to adulthood, I was raised by my second parents for many reasons which I will not go into right now. In all of these, I have always loved independence.
So in school, I would go out to buy petroleum products and supply to construction companies. It has always been part of trading and hustling – if you like. Fortunately, I took my A-levels in Port Harcourt, and gained admission into the University of Port Harcourt (UNIPORT). I consider Uniport one of the best places to be trained in a cosmopolitan city, as far as Nigeria is concerned, because one is quite close to the oil industry.
In the 90s, next to our campus was William Brothers (WILLBROS, as many people know it) one of the most respected oil services companies at the time. I had the opportunity to work straight from school with WILLBROS on some major projects and I had bosses whose roles cannot be under estimated in my life. Those people mentored, supervised, and took me under their wings. They saw my passionate energy and picked me up and corrected me every time I made a mistake. Some of them are Paul Nova, Charles Oseizua, the first corporate chairman of the company I worked for, who gave me absolute free hand. Of course, my American boss, who is today, also my friend. These men actually moulded me. I had the benefit of working very early on in life, family inclusive. I was never afraid to take on challenges, to go out there and see things for myself.
Let’s project into the future; next marginal field round, will we be seeing the emergence of Century Petroleum Development Company or is Century content just playing in the service end of things?
Not at all. Already, we have Century Exploration and Production Limited (CEPL), which is actively involved in marginal field development and we are not just a service provider; we have equity stakes in that. That is, financial and technical services on that. So, our goal is to see that we can provide support for more marginal fields and indigenous players, really. It is as simple as that. We are also fully aware of the transitioning of hydrocarbon, and whether we accept it or not, this transition is real. But as far as we can see, conventional fields will be struggling to meet demand in the years ahead as government and society continue to push for improved quality of living, inclusive governance and inclusive economy. This will result in having less poor people as we move people out of poverty because the demand for energy will go by the rate at which more people will get out of poverty. Using Africa as a case study, if we get up to 40% of its population out of poverty, Africa does not have the conventional energy resource to support the Africans that are currently not consuming optimally. Or not even consuming 20% of what they need to consume if they are living a middle-class life. There is a huge population that cannot buy energy because they do not have the earning capacity to consume. Now, if you raise their living standards, i.e. their earning capacity, you can see that the amount of energy we produce is not enough. That means, what we should be more interested in, is, how do we cater for the population that is currently excluded from the economic system? A population that is not enjoying steady power, three square meals, access to quality transportation, and running water, means that they are not utilizing energy. It might appear that your energy supply is more than the demand. Indeed, it might seem so because about 60% of the population cannot afford quality life; therefore, they are all consuming below the minimum energy consumption or any other consumption you can think of. The moment the poverty rate drops like 30%, you will see a demand surge. The question is, can you meet that demand? That’s the real key for us. From that point of view, we see a huge opportunity for demand.
