Nigeria’s growing logistics capacity

Nigeria

Seni Edu, managing director of Eko Support Services, talks to The Energy Year about the potential of Nigeria’s maritime sector. Eko Support Services provides logistics support services to oil and gas clients in the Western Niger Delta and offshore Lagos and is a multipurpose terminal within the Lagos Port Complex.

What is your assessment of the domestic maritime sector, and what activities do you think still have unrealised potential?
In April 2023, the Lekki Deep Sea Port became partially operational in the Lagos Free Zone, and it represents a key infrastructural development for the city and the country. It is Nigeria’s deepest draft, largest sea port and one of the largest ports in West Africa. It is a linchpin for regional maritime activities.
So far, only the container terminal has opened, with the container terminal being operated by a sister company of CMA CGM, which has diverted most of their cargo to Lekki. This reduces the volume going directly to our neighbours, such as Apapa and Tincan.
It takes time for agents and consignees to feel comfortable when moving to new zones because they want to understand how the operational and infrastructure network in those areas works first. We have already been involved in some logistics works for Lekki, and we see good opportunities stemming from it for our business.
Besides CMA, I believe that other shipping lines will start going to Lekki as well since the port allows them to bring larger vessels to Nigeria, a crucial aspect for both decreasing trade-route congestion and bringing down the cost of freight. This in turn spurs business for shipping and logistics companies.
Finally, Nigeria has a very favourable geographical location. The country is positioned as a potentially crucial trans-shipment hub. As a country, we are not used to having trans-shipment operations because Nigeria traditionally imports so much.
To kick off with trans-shipment operations, a key condition is to have a solid multimodal network with good interconnections between road, sea and rail. Maritime waterways are already up and running, and now new road infrastructure is underway, including between Lekki and Sagamu.
The bottom line is that multimodality will increase the country’s logistics and transportation capacity and significantly boost the country’s trans-shipment potential, which in turn will open up big opportunities for the maritime sector.

Can you walk us through Eko Support Services’ involvement in the oil and gas sector and the company’s strategy to expand in the field?
When we started our business, we did it 100% in oil and gas. Then, we redeveloped, adjusting to market demand and shifting more towards commercial, general and project cargoes. In oil and gas, we successfully completed a project in 2024 for the replacement of the Bonga FPSO mooring chains, and then we went after those of Chevron in the Agbami oilfield.
We also delivered regular transit work for ExxonMobil’s Erha project and for Nigerian Agip’s Abo oil and gasfield. As of today, I would say that oil and gas represent around 30% of our portfolio.
In terms of expansion in the field, we must think strategically: given our location, we cannot offer many logistics services to indigenous E&P companies buying the onshore assets IOCs are divesting from.
However, we can play a role in delivering services to companies operating in deepwater, so now we are looking at providing logistics solutions to the players with assets offshore Lagos. Despite there being few now, there are some interesting prospects ahead for our business, particularly if ExxonMobil will go ahead with its FID on the Bosi oilfield and Shell on Bonga South.

What is the company’s approach when it comes to digitalisation and sustainability practices?
We are gradually digitalising our services and are working to increase automation in our processes and access control. Digitalisation is important because it goes hand in hand with the energy transition, representing a key tool for its successful implementation, and sustainability is an area that we are increasingly focusing on.
The IMO [International Maritime Organization] lowered the permissible sulphur content of ships’ fuel oil to 0.5%, and we believe that eventually the vessels coming to Nigeria, with some of them being very old, will have to change within the next three to five years.
There are options to supply green power to the vessels. For example, we have been working on a solar project that is now 80% complete. This is part of our quest to reduce the use of fossil fuels.
Commitment to sustainability is the path ahead to stay and thrive in business, particularly when dealing with oil and gas players, as it is becoming increasingly difficult for IOCs, for instance, to even invest in carbon projects, given all the restrictions they face when doing so. We are therefore more than open to supporting companies that want to reduce their carbon footprint.
We have been asked by a member of a group called the Project Freight Network, in which we are a member, if we are interested in developing a wind farm in Lagos. We have initiated talks with the Lekki port as well as the Lekki Free Zone about opportunities for land concessions for this undertaking. Feasibility studies are ongoing and will take some time, but this shows our engagement in green initiatives.

How would you evaluate the performance of the regulatory bodies in charge of overseeing and guaranteeing smooth operations in the logistics sector?
In the recent past, there have been some frictions between the two free zone authorities, the Oil and Gas Free Zone Authority (OGFZA) and the Nigeria Export Processing Zones Authority (NEPZA), but now there is more collaboration between the two, as they are trying to make business and import-export processes more seamless.
The direction in which they are going – together with the Federal Ministry of Industry, Trade and Investment, under which the two entities fall – is to centralise operations under the ministry and avoid overlapping functions between the agencies. There is a lot of work being done now on free zones, as the government wants to make them more attractive.
NEPZA and OGFZA must collaborate to redirect operators into one or the other entity according to their activity and deal with Customs, regarding which there has been a bit of a tussle between the various Customs commands. FZ [free zone] Customs argue non-FZ cargo should pass through them, when in practice that is not feasible because there are different codes you need in order to clear cargo and procedures on how to open cargo and where you can sign for the products’ delivery.
Finally, another aspect that authorities are aware of and that we have also suggested is to remove the word “free,” from the zones and recast them as “special economic zones.” The reason for this is that when you say “free,” those who do not fully understand the free zone concept think that it means they will not pay taxes. Instead, you are still paying taxes, although of a different type, as you are paying them on finished imported products.

Could you give us details on your vessel-sharing concept and insights on which of your services are forecast to experience a rebound in demand soon?
We did some trials for ExxonMobil and some others out of Port Harcourt for Amni and Oriental, but we did not deliver them as we expected, and that is due to the vessel contracting model in place today. This model makes it difficult to fully implement a vessel-sharing concept despite the practical benefits it can bring, foremostly in terms of cost savings.
The only way things can change is by amending the contracting and awarding cycles. They should be reduced. We have been working as logistics contractors for oil and gas majors, having delivered the deck plan for companies such as Total and Chevron, loaded it accordingly, did the plan for the yard, but then have not actually run the vessel.
Regarding my expectations for our services’ future demand, it will really depend on what happens on the oil and gas project side. To give you an example, we did a lot of heavy lifting work in the recent past for the Dangote fertiliser plant and for the Abo field. Then, projects slowed down in the last three or four years, and this service saw a big downturn.
However, now there are many construction projects in the pipeline. If they see the daylight, then heavy lifting will again be a key area for us.

How do you envision Eko Support Services’ next phase of growth?
Logistics is a field where prices can vary significantly, as it involves several players. The more aspects of the supply chain one covers by providing turnkey, door-to-door solutions and using different warehousing and barge trucking tools, the greater the benefits and the lower the risks.
You give your clients a price, and then you are responsible for maintaining it because you are controlling more aspects of the supply chain than you would be if you were only in trucking. If the terminal delays you or the warehouse delays you, that affects your cost.
If you are doing everything, you should be able to, through economies of scale, provide cheaper solutions. That is what we are aiming for, and to some extent, we are already doing so, by ourselves and sometimes with the help of third parties.
Moreover, we are looking at additional facilities while also moving down our supply chain in terms of transportation, shipping and regional growth. Once you are in one location, you are limited by your size and physical footprint, and you become more efficient, find new services and innovate in how you deliver them. Finally, we want to extend our regional footprint and our partnerships’ scopes.
We are already in discussion with some shipping lines. They had very good years in terms of profitability, and they started looking not just at freight but beyond the ports to see how to do logistics in different countries, either via acquisitions or JVs. This might open interesting opportunities for us.

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