A stronger outlook for services in Nigeria

Nigeria

Mauro Bartezzati, managing director of Elper Oilfield Engineering, talks to TOGY about the outlook for new projects, the potential for international expansion and the efficacy of local content policy. Elper Oilfield Engineering is a Nigerian-owned company that specialises in engineering and technical services for the offshore and onshore oil and gas industry.

Which projects have kept Elper busy in 2019?
On top of the classical manpower services, we had inspection services projects, maintenance and operations, and some small contracts that involved construction, but the bulk is still concentrated between manpower, inspection and maintenance. Our clientele has stayed the same, comprising Snepco and SPDC, Total, ExxonMobil and Chevron.
We still have some expectations from our local indigenous companies. We are making proposals and exploring options, but it is taking time and the market was not ready to kick off various activities. From a market point of view, we have tried to test how receptive the marginal fields are, but things are not encouraging at the moment. Better barrel price stability will help the indigenous players and marginal field operators strategise for more activity..

What are your specific targets?
We are trying to find people who are ready to discuss projects. As a general impression, it seems like some time is needed. The people who are already producing have their own suppliers of services, and the ones that are ready to go are not ready to tender yet.
On the gas side, we have been pursuing the Brass LNG project, which for many reasons was not developed. However there is still the possibility that this project will come to fruition. We have positioned ourselves for the project and have already been pre-qualified for Nigeria LNG’s Train 7 project. This is where we are expecting progress, and we have been doing our registration with DPR, NIPEX and the rest to be ready to respond to and meet the criteria that will be needed. This is for the inspection service market, which means pre- and post-construction.
On the pipeline and the deep offshore sides, since 2017, we have been trying to see if any other major project would come up, but not much has happened until now. With the IOCs, the cycle of projects is still slow, as it traditionally has been, typically about four years from the moment of prequalification to the start of the contract.
From 2017 to 2018, we signed a few projects with IOCs. We have recently been awarded two major projects that will stabilise our operations for the next three to four years. That is the standard duration for projects with IOCs. This is a mixed contract, made up of inspection and technical services. We also have a brownfield services project with Shell. Ongoing activities are relatively stable. We are in a specific line of business that requires a long tendering period and a long-term commitment from the clients.

Do you see any major developments coming up?
There are not many coming up immediately. We have been involved over the past 10 years in the installation of equipment in the Warri refinery. We tendered in 2009 and were awarded the project in 2010, and we got the second payment two months ago.
I mention that because there is a refurbishment project for the Port Harcourt refinery ongoing, or started at least. It is in the early stages. In terms of local content, we have positioned ourselves as the provider of any soft technical services that they might require. They could need a lot of inspection activity because refineries require inspection before, during and after.
Elsewhere we are following the rollovers of various projects. In the past we had hopes for the changeover of the distribution facilities related to pipelines, compressors and things like that, but it isn’t going as quickly as expected.
It is still an area where our expertise could be required. They will need someone to inspect and decide which portions to change beyond any repairs. On top of that there are the changeover and inspections to check that everything has been connected properly.

Do you expect inspection services to grow in the coming years?
I would be happy to see a stable platform of services. The increase is connected to major investments. If the few major contracts would be approved and move forward, within the framework of the PIB, then there would definitely be strong opportunities we could tender for.
If there were a stable price regime, we would push further into the indigenous market. This is where we would like to position ourselves, because it is an area where we haven’t been very successful before now, moving from the IOCs to the domestic market.
The domestic market is clustered in smaller production areas, but they are growing and it will be a sizable market. It is an area that has seen significant improvement, both technically and in terms of experience, thanks to the incentives that local companies have given all levels of the chain.
It is time for us to strengthen our position in the market. By the end of the year, we will have started a new, more aggressive strategy to penetrate this market and expect to see some results of this effort soon.

Is international expansion a part of your strategy for the next year?
We think we should concentrate on our local market and grow more here before going on international adventures. Our business is people driven, and when you migrate to another country you need to allocate resources to build up the same relationships you had where you started. Building up that network takes a long time and it has to be internally grown; you cannot contract that out because it depends on your culture and how you do business.
You can do a lot of things overseas: You can hire lawyers and competencies, but you cannot transfer a business culture. Today, our core team is still small in relation to our contracted workforce, and we are exploring the local indigenous companies because we want to build ourselves up for another year or two before deciding which markets to enter. We have Ghana, Gabon, Guinea and so many expansion options nearby. However, we want to do it solidly with the necessary internal resources.

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