A question of time in Nigeria

Nigeria

Tein George, chairman of Aveon Offshore, talks to The Energy Year about how the Nigerian government can support the oil and gas industry, the company’s recent projects and the viability of marginal field development. Aveon Offshore does fabrication work and supplies subsea components to the oil and gas industry.

What approach should the government adopt to further enhance the hydrocarbons industry?
Oil and gas remains the prime revenue generator in the country. There are winds pushing to diversify, but this will take time and investment. Either way, we will never run away from continuing to invest in fossil fuels. The government is committed to supporting the industry because it knows it represents a vital source of revenue, especially for foreign exchange.
What we ought to improve is the pace at which projects are developed. At the same time, it would be important for the country to pursue multiple projects at the same time so that if one falls through, there will still be others pushing forwards.
In addition, local content has become the largest provider of employment in the oil and gas industry. Without it, many projects would have been developed overseas. Despite it already being such a fundamental driver, projects must still conceptualise a space for local content to contribute.

What is the major issue EPC projects encounter today?
There are many projects in the pipeline in Nigeria. If they ever come to fruition, there will be work in fabrication, engineering and installation. The key question is how fast they will actually materialise. It takes too long for projects to be sanctioned – that is the real issue.

What questions surround the viability of marginal field development?
Through the recently launched marginal fields bid round, DPR [Department of Petroleum Resources] will award the fields to companies that can pay the signature bonus. However, it is yet to be seen whether these companies can channel the required financing to bring the field into production. This implies already having pre-financing coming from a group or bank, and this is difficult to find.
At the same time, DPR aims to make sure a good number of those fields come into production early. In the past, marginal fields took quite some time to receive finance and to be brought on line. To avoid this, DPR has set a five-year development mandate. Whether companies will be able to stick to this timeframe remains in question.

In what ways are you expanding your business scope?
We offer onshore and offshore services and we are now trying to expand our offshore capacity to be able to provide hook-up and commissioning services. We are also looking into the acquisition of light offshore facilities and equipment that will enable us to provide more offshore services.
Likewise, we are encouraging our clients to grant us the full suite of EPC work, unlike before, when we only focused on fabrication. In other words, we now offer A-Z turnkey EPC solutions. Thus, we are actively seeking to do more engineering and more offshore, added to the fabrication for which we are well known.
When it comes to asset acquisition, it will all depend on the work we have, which means that it will be driven by the commitment from our clients. We do not want to take the risk of acquiring assets and not harnessing any work. So, if we are granted a three- to five-year offshore contract, we will be willing to acquire assets such as light supply vessels, tugs, barges and any craft that enables us to do hook-ups, installation and commissioning of platforms, for example.

How successful was the latest production platform you delivered for the Anyala field?
The last major project we completed was a 450-tonne topside production deck module (PDM) supported by a 350-tonne drilling deck module and subsea structures (DDM and SSS) for the Anyala field in OML 83.
We carried out this project for the NNPC-First E&P joint venture and it took more than 12 months to complete. It is a conductor-supported platform (CSP), which differs from the usual four- or three-legged one as it uses a specialised proprietary technology licensed by UK-based Aquaterra Energy. This system allows for fast-track deployment, saving time and costs. The value of the project is in the range of tens of millions of dollars, and it has been highly successful as First E&P has achieved first oil with it.

What opportunities are you seeking via bid rounds for 2021 and beyond?
We are participating in several bids including for Bonga South-West and we have also bid for work on NLNG Train 7. We aim to harness opportunities that will allow us to fabricate pressure vessels and be involved in steel fabrication. The Train 7 project will spur a substantial amount of fabrication demand in the country.
Also, we are seeking work in Shell’s gas ventures in the HA field, located in OML 77, and the HI project in OML 144. This five-well scheme involves around 500 mcf [14.2 mcm] of gas per day and will be fed to Train 7. So we are quite busy participating in these bids and we hope to be granted work once they are sanctioned.

By what means are you aiming to become a full-fledged EPC company?
Our aim is to become a full EPC service company and have complete control over cost and execution. We want to do this by partnering with other companies. This means that we will participate in bids as joint-venture partners and/or consortium partners with other engineering or installation players.
The construction part is what we do. Additionally, the installation part is where we would be keen on looking for partners, if the project is an offshore one. For example, we would be looking for a company that has complementary assets such as installation vessels . Our mission is to be a pre-eminent EPC player in the sector.

What opportunities do you identify in Nigeria’s energy space beyond oil?
The energy transition is a reality one cannot shy away from. While people are moving away from crude, gas is a plausible intermediate because it has a lower carbon footprint. Society is thinking beyond fossil fuels now and moving into hydrogen, wind and solar.
From here, solar is bound to be the next big thing moving forwards. However, one has to find the equipment supporting this form of energy and this comes from abroad. Also, wind is quite expensive due to the cost of turbines. There is a limited market for it here as it is difficult to find offtakers with bankable finances to invest in wind. Hydrogen also requires advanced technology that is not well embedded in Nigeria. The energy transition is therefore a question of time and money for energy players, but it is bound to happen.

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