How Century Group is using local content to halt, build capacity for the economy

Nigeria’s first decade of local content development has being a voyage of gains, pains, and some gaps coincide with a period of exchange rate crisis, however firms like Century Group is championing a vision of bold innovations, social investments, and local capacity development.

Before the enactment of the Nigerian Oil and Gas Industry Content Development (NOGICD) Act 2010, also known as the Nigerian Content Act, most operations in the nation’s oil and gas space were executed by International Oil Companies (IOCS).

The glaring lack of technical know-how in-country led to the importation of skills, with the affected expatriates being remunerated in the United States dollar. This cost the country capital flight to the tune of $380billion putting more pressure on Nigeria’s local currency.

Put differently, the dismal contribution of local content to the sector pre- NOGICD was much more painful because the oil and gas sector, which accounted for 90 per cent of the nation’s revenue, contributed less than 38 per cent to the nation’s Gross Domestic Product (GDP).

Read Also: Discussing the path towards a cashless economy

The above narration is changing as companies such as Century Group and other indigenous firms are demonstrating how Nigerian companies can provide bespoke and world-class oil servicing support to the industry, a development that means good news for Nigeria’s naira.

For many, Century Group was not a name that rang a bell four years ago but the company is gradually rising from obscurity to arguably a major player in the upstream sector.

As typical of emerging giants in the sector, the Company is primarily focused in the upstream industry, harnessing exploration and production opportunities in the African continent with current emphasis on the Niger Delta Petroleum Province and the West African sub-region.

“The confidence that we have and indeed one of the bright spots is the fact that the local content has allocated a lot of support services to indigenous resource in terms of manpower and all that,” Ken Etete, Group CEO Century Group said.

According to Etete, “the more scope is domiciled, executed by local resource and local entrepreneurs, the more confidence we would have in the Naira.”

As typical of emerging giants in the sector, the Company is primarily focused in the upstream industry, harnessing exploration and production opportunities in the African continent with current emphasis on the Niger Delta Petroleum Province and the West African sub-region.

“We are definitely in a position to make all the other foreign competitors become more expensive. So more local companies would be doing better, they will increase their volume in supporting the services. So, in many ways, there’s a positive to it. The moment we start to build internal capacity against international competitors, we would become more competitive, our ability to supply will become more,” Etete said.

A true Local Content Champion, Century Energy Services Limited is the only indigenous company in Nigeria that wholly owns two Floating Production Storage and Offloading (FPSO).

One of the company’s major project includes Operation and maintenance of the Front Puffin FPSO, at OML 113 in the Benin Basin owned by Yinka Fola Petroleum (Yfp)/chevron Nigeria Deepwater and Vitol Exploration Nigeria.

The company also offers a range of services to the oil and gas industry in Nigeria including: Operation and Maintenance (O&M) of offshore production and storage facilities including EPS, FPSO MOPU, FSO and Drilling Rigs/jack up; Operation / Maintenance of Flow Stations; Drilling / Drilling Support Services; Field Development Solutions; Engineering, Procurement, Construction and

Installation (EPCI) of Oil and gas facilities; Mooring and Installation; Chartering and Management of Offshore Support Vessels, Anchor Handling among others.

“In the upstream, most contracting work are paid in a currency split of 65percent Dollar currency to 35percent Naira. Local content is far less about savings than about capacity building,” Toyin Akinosho, geologist and Publisher Africa Oil and Gas Report said.

Nigeria’s economy had barely recovered from a slump brought on by the 2014-15 oil price collapse when coronavirus hit. Oil accounts for around half of federal revenues and nearly all of the country’s foreign exchange, so plunging oil prices combined with lockdowns to control the virus outbreak hit the economy hard. The crisis threatens to tip Nigeria into its deepest recession for decades.

The CBN has adjusted the official exchange rate twice this year. The first one was from N307/$1 to N360/$1 and then just last week, from N360/$1 to N380/$1.

“We are in that infant stage where even the heavy hitter local content companies: Ciscon, Geoplex, Century etc, use foreign technology largely. The philosophy is that if you don’t attempt to do it here, you will not ever tie the oil industry to the rest of the economy,” Akinosho said.

The growth of local content development from five per cent in 2010, to 28 per cent in 2017, and 31 per cent currently is seen by many as a remarkable feat by most stakeholders.

It also means more money for the nation’s economy, improvement in local capacity, retention of foreign exchange hitherto spent on the hiring of expatriates, and completing jobs abroad.

The development, which also translates to timely delivery of projects, indeed makes the country selfreliant and a net exporter of skills to emerging oil and gas countries, not only in Africa but in other parts of the world.

Only recently, the NCDMB commissioned a 17-Storey building as a testament to what it has achieved in local content development within 10 years. The structure located in Yenagoa took five years to be erected and was executed by an indigenous civil construction company, Megastar Technical & Construction Limited.

In terms of crude oil production and exploration, companies like Eroton, Seplat, Aiteo, Oando, First E & P, as well as the Nigerian Petroleum Development Company (NPDC) are success stories to refer to. These local companies have been able to compete with majors, growing the level of activities and output in the period under review.

Seplat, which made its first acquisition in 2010, for instance, has risen to become a leading indigenous oil and gas operator in the country. Its gross operated liquids production at OMLS 4, 38, and 41 at the time of acquisition was 14, 000 bopd. But the company has grown this to a peak rate of over 84, 000 bopd.

The NPDC has, on its part, emerged as the leader in the Upstream Sector and it currently operates about 28 concessions. About

21 of which are OMLS and 7 OPLS. It has 100 per cent ownership of five blocks, including OMLS 64, 65, 66, 111 & 119. It also has a 60 per cent participatory interest in four blocks- OMLS 60, 61, 62 & 63. The company also has 55 per cent equity in nine blocks- OMLS 4, 26, 30, 34, 38, 40, 41, 42 & 55, and regarded as the fifth-largest crude oil producer in the country.

Nigeria has also recorded successes in the area of fabrication as reflected in the rising number of fabrication yards scattered across the country. Indeed, the construction of the topsides of the Egina FPSO modules was integrated by Samsung Heavy Industries Limited (SHI-MCI) at LADOL Yard, in Lagos.

The development also gave rise to two world-class pipe mills – the SCC Pipe Mill with an installed capacity of 270, 000 MT per annum, and the Yulong Pipe Mill, with the capacity to manufacture 400, 000MT HSAW line pipes per annum.

There is also a $50million Nigerian Content Research & Development Fund aimed at driving the development of indigenous technology and innovation.

The Nigerian Content Development and Monitoring Board (NCDMB) targeted increasing local content to 70 per cent in the next 10 years in a bid to retain as much as $14b in the country yearly and to create as much as 300, 000 jobs.

Consequently, the NCDMB intends to pursue and bring to fruition, projects that would promote in-country manufacturing, domiciliation of work, employment generation, capacity enhancement, and capital retention.

Get real time updates directly on you device, subscribe now.