In this interview with CHIKA IZUORA, chief executive officer of Oilserve, Emeka Okwuosa, said indigenous firms have developed capacities and are deeply involved in infrastructure development.He said some of the ongoing critical gas infrastructure projects in the country being undertaken by them would boost gas utilisation objectives of government.
The Obiafu-Obrikon project is a major gas infrastructure, when is it coming on stream?
The Obiafu-Obrikom-Oben project, popularly called the OB3 has been undergoing pre-commissioning in the last three months. That project is the largest gas pipeline existing in Nigeria and it’s 48” diameter and 67 kilometer. For you to do pre-commissioning, you have to clean up the pipe and pressurise it. Just imagine 48”-67km pipeline and the volume of water you have to fill. It has to be sectionalised , before that can be done.
To dry alone, because you can’t mix water with gas which you intend to transport, you will use a compressor with high pressure and temperature and pump. Just imagine the volume of air you have to pump into 48” diameter-67km pipeline. Sometimes, it can take up to three months to dry.
The process is long and that’s what we are doing now. On the other hand, we are also doing the installation works at the back end of the facilities because the pipeline we are building is different from the ordinary pipeline Nigerians are familiar with. We have the facilities which include the metering stations, the pigging stations and other heavy duty equipment. you have to install, interconnect, test, calibrate and ensure that they are all in good shape to avoid any leakage of sort
The project is at the terminal end, we are supposed to finish it by the end of July 2018. So we are still on track as we speak.
Funding has been a limiting factor especially for indigenous companies, how has this affected your performance?
It is a truism that most oil and gas projects are capital intensive. Let me cite an instance using a recent project, the AKK pipeline construction as an instance. The project owners, the Nigerian National Petroleum Corporation (NNPC) won’t be providing funding for this project.
If you look at the AKK project, you will realise that we got the first section which is the most important. If you don’t get the first section right, you don’t have a pipeline.
And if I may ask, why should we not be able to attract funding for this project since NNPC won’t be providing same? That’s the whole essence of the bid. In the bidding process, every company bidding did actually demonstrate how they can raise the finance and not only that they can do the job.
We have already done 80 per cent of that. What we are waiting for is to close the deal with the NNPC.
This is a gas infrastructure development and there are funds all over the world, for those who really know how to go about it. You just have to have the right term sheet, and the right way of providing security for it. If for example, a bank in America says they can give you a billion dollars, there is more to it. The problem is the risk and another is, can one pay back or be trusted to deliver.
All these coming together could have effect on the pricing. If your risk is too high, your pricing will be up. And if the pricing is too high, the project may not be economical and that’s how projects fail.
But in this case, it’s all balanced. Oilserv being an EPC company of repute has given us advantage because we don’t need to prove ourselves, the financiers know we can deliver. We have the capacity to deliver. We have three financiers eager to give us fund but the biggest challenge in this kind of project is the ability of the federal government to provide a guarantee for the fund.
We have confidence based on our discussion with the NNPC who is our client that this arrangement will work. NNPC has a system in place with the support of the federal government to make sure that it works.
We are satisfied with the security they are providing and our banks are also satisfied with that. So the issue of funding is not a problem in anyway.
The way it works is that, when the money is ready, it is domiciled in the Joint Venture (JV) account with the NNPC. Now comes the EPC, as you work, you are paid from that fund.
Are you doing this project alone?
You have to fully understand that this project is not just an EPC project but it’s a contractor-financed project. You go into consortium for a particular reason. Oando is a partner to Oilserv, while Oilserv is the principal EPC company. And I’m talking from the view of EPC. Oando does not build pipelines, we are in a consortium because it’s contractor-financed and it gives us more leverage.
Oando has always had concessions from NNPC to develop. For example,they developed the gas pipeline system in Lagos, through their sister company called Gaslink. They built Eastern Horizon company, South-South pipeline which is from Okanafo through Calabar to Ifamoseng where you have Unicem Cement Plant.
Many other projects they have done but in the core of these projects was Oilserv EPC Company. Oilserv usually build the pipelines, Oando doesn’t. In the joint venture, Oilserv will build the pipeline and not Oando.
What are your challenges?
Oilserv was set up on a sound basis and principle. That’s the basis of sound knowledge of engineering and clear plan to grow technology and grow the company organically.
When we started in 1995, it was a very small company. It was only me and one other employee and we slowly built it up. Now, we built it up by re-investing whatever money we made and acquiring latest technology. It’s not just about technology acquisition but by knowing the principles of these technologies.
By my background, I am a cerebral engineer and I worked in 12 different countries before I came back to Nigeria. I was principally focused on developing engineering capacity. Along the line, we moved on to look at the best way of achieving the EPC work we have. We later introduced the welding works.
Welding is at the core of pipeline construction and the major threat in welding is the fact that using traditional welding system which is the manual welding system, will involve welders association.
Some of them are not there to work but to create problems and you can’t control the quality of output too. We moved on to develop automatic and semi-automatic welding system where it is more like being in a production line in a factory. We trained our own staff and they became the welders but because it is not manual welding but automatic, so we are not bound by certain rules of the welder association.
With this, we are able to do as much as 25 joints a day. Manual welding can’t do more than six joints a day. That’s how we speed up.
The other technology is our Horizontal Directional Drilling (HDD) technology system. You will realise that in building pipelines, you cross rivers, creeks, and all kinds of barriers. If it is water, you will dredge it, drop the pipeline, and cover it up. But by doing that, you disturb the water system, damage the environment and you may muddle the water. If you don’t restate it very well, you create additional problem down the road which can be erosion of the water bed.
To avoid creating this environmental problem, we developed a system where we can drill from one bank to the other without touching the bed of the river.
In crossing roads, in the olden days, we have to cut the road and imagine cutting an eight lane road. Today, we do cross-boring system by going from one end to the other without disturbing vehicular movement on the road.
All these gave us advantage over others. We train students and graduates and we invest in human resources. In all, we were able to win the AKK project because it was through a bidding process and we came out best.
We are the only company in Nigeria today that can deliver such project, the rest can’t. We are the first indigenous firm to graduate from being a construction firm to a full EPC company. To be a full EPC company is expensive. It requires investment, it requires dedication.
The cost of executing jobs in EPC projects in Nigeria is going up, how are indigenous firms coping?
Well the volatile business terrain in the country has made it an unfriendly and risky business environment and now provides an avenue for financiers to mark up interest rates in order to accommodate unforeseen circumstances.
Nevertheless the company is sustaining its business integrity and recently we have made an inroad into the Abuja-Kano – Kogi (AKK) gas pipeline project,and the company’s track record in pipeline construction has made it a household name in the field of EPC.
How did you get to develop this capacity over time?
I am an engineer by profession and also an entrepreneur with over 35 years of experience in engineering in maintenance and operations, teaching, wireline logging and interpretation, seismic acquisition, processing and interpretation, pipeline engineering, procurement and construction (EPC), project management, drilling and drilling services.
Some of these activities span Europe, North Africa, West Africa, Gulf of Guinea/Central Africa and Indonesia.
I have worked in various capacities for Schlumberger in positions that spanned field engineer to technical manager in the following parts of the world; Pau, France, Scotland , Libya, Mauritania, Senegal, Cote D’Ivoire, Ghana,Nigeria, Benin Republic, Cameroun, Gabon, Congo , Angola , and Indonesia.
I am very passionate about development of human capacity in high technology
areas of the oil and gas industry. This is being achieved via various schemes that
have been instituted through the companies that I founded and run.
Together with other key practitioners in the oil and gas engineering, exploration and production sectors, I was instrumental to the enactment of Oil and Gas Local Content Law three years ago. This law has helped to institutionalise the development of sustainable local capacity in the oil & gas industry.
What makes you stand out as an entrepreneur?
With my vast experience and contributions to development of national economy I have received several awards in the course of practice of oil and gas EPC services all over the world.
I am the founder of Sir Chukwuemeka Okwuosa Foundation,and have made contributions in education, road, erosion control, water, electricity infrastructure provision, etc.The foundation is also building a N1billion medical facility at Oraifite, Anambra State.
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