A diverse footprint in energyJune 27, 2022
Tony Osuagwu, CEO of Calaya Engineering Services, talks to The Energy Year about the company’s footprint in the Nigerian energy industry and how technological advancement benefits its operations. Calaya Engineering Services provides workforce solutions, wellhead maintenance, construction, asset integrity and downhole services.
How would you describe Calaya Engineering Services’ establishment and main activities?
Calaya Engineering Services was incorporated in 2005 as an engineering and services company. We now have more than 260 staff, and we service most of the IOCs in Nigeria. We initially started as manpower suppliers but grew into wellhead maintenance, construction, asset integrity and downhole activities.
We set up offices in Equatorial Guinea and [Republic of] Congo, and we are starting operations in Senegal and Namibia. Calaya Engineering Services has grown and diversified over recent years, which has ushered in a new phase of the company called Calaya Group.
What is the company’s footprint in the Nigerian energy industry?
We have a three-year contract with Shell. They had many problems with one of their Christmas trees, and by providing wellhead maintenance, we were able to save them 50% on their costs. We have also carried out brownfield engineering services for them. The same happened with Addax Petroleum: they had issues with their wellhead, but it’s been functioning better since we provided maintenance. We have been working for them for six years.
We also work with Chevron, providing electric lines through sand clean-out services. For AGIP, we provided bunkering lines, fire services maintenance, NDT on each of their facilities, calibration of meters and internal corrosion monitoring. We are working hand in hand with the new marginal field operators, and we plan to expand our footprint there. In 2020, we did the revamp for one of NPDC’s offshore platforms in OML 119, and now they are entirely back into production.
Our footprint has created more opportunities, and companies are reaching out to work with us. We have been doing tremendously well when introducing technology into the Nigerian system, and we plan to introduce it to other African countries. We also plan to expand into the refining space shortly.
How does technological advancement benefit your operations?
Technological advancement is critical because it enables the client to have real-time data on their asset and its features. This can provide quick solutions while getting production back on stream. We have a partnership with a UK-based company called RS Clare; they have a fantastic technology for wellhead maintenance. The wellhead is critical. Oil goes through it before entering the pipelines, and when this happens, it usually comes with highly corrosive systems, sand, or high pressure, which in most cases destroys the inner lining of the Christmas tree.
It costs money every time to change the parts. If you want to deploy the rig, you will have to kill the well, which costs about USD 100,000 while being time-consuming. If our technology is implemented in a project that would usually take 30 days, it will decrease the time needed to two or three days. This represents a significant savings in terms of material costs and downtime by preserving the lifespan of the asset.
The downhole camera is used to observe what happens downhole in real time as opposed to using tools to open it up and analyse it. The camera will show everything going on below the casing to see if the wax is strong, sighting the entire parameter and allowing us to predict the nature of the reservoir.
Another technology available is called hybrid acoustic. It is used in most pipelines, storage tanks and separators. It helps us understand the location, nature and size of a defect. Most companies are forced to shut down operations because their assets collapse without a certified cause, but this technology allows you to calculate and predict whether you need to carry out a sectional replacement or remove the pipe altogether.
We have provided this service for Agip and Shell, while we deployed it also in Equatorial Guinea for Marathon Oil. We plan to increase our clientele, but most companies are going back to conventional systems because they don’t fully understand the benefits of innovative technologies. They mainly consider costs, while protracted damage should be their top priority. Nigerian facilities are old; we need to use precise technology to protect the safety of the people who work in these facilities.
What are the main challenges a local manufacturing company faces in Nigeria?
The main challenge would be funding. For example, we provided services for some clients back in 2018, and they have yet to pay us. Our host community situation is also critical; they don’t make it easier for projects to be executed effectively, and the conditions they set are not beneficial for the developments.
The tax regime is another crucial challenge. Most materials used in oil and gas are imported, which translates to high tax rates, cost of materials, Customs charges and air freight. The overall cost of a project rises incrementally when factoring in these expenditures. The government should look into this and find ways to encourage local content. The NCDMB [Nigerian Content Development and Monitoring Board] is trying to get the government’s attention on this. The government needs to provide support in this area by helping us become better players in this sector.
What are Calaya Group’s manufacturing capabilities?
We have a warehouse and manufacturing plant in Port Harcourt. We focus on early-stage platforms, and we have put in place every necessary strategic system for valve assembly, electrical switchgear assembly, fabrication of flanges and creating new machines. To fully enter this space, we lack financial support because we need to buy pieces of equipment which are capital intensive.
We have excellent and supportive relationships with local banks, but they have limitations. We are looking for ways to acquire foreign financial support, and for us to get this foreign financial support, it falls back to the Central Bank of Nigeria. They might have to provide a bank guarantee, which is a bit difficult for them as well. This situation doesn’t encourage us to follow through with sourcing for foreign financial support.
Where do you see Calaya Group in the next two years?
We will evolve in the energy industry. We plan to enter the gas space soon; we will sign an agreement with a Canadian company that has very innovative technology for gas. We are also looking at incrementally consolidating our regional presence. We want to be fully established in Congo by having our equipment there while training the locals.
We are authorised to certify our personnel, and it is an internationally recognised certification. In Angola, we are working with a local partner, and we expect to grow our footprint there even further. Calaya Group will be among the top-10 African engineering and services companies and one of the best in fabrication.