Building Nigeria’s marine sector

Nigeria

Ataku Inyangudo, managing director of Capricorn Marine Group, talks to The Energy Year about the dual shock's impact on the oil and gas industry and marine sector and the company’s approach to catering for growing needs in shipbuilding and services. Capricorn Marine offers shipbuilding and repair, fabrication, marine equipment services, marine hose, flowmeter and diesel outboard engine sales and repairs.

How have the oil and gas industry and the marine sector been impacted by the dual shock?
There are two main factors impacting our industry. On the one hand, we have the fall in oil prices, which has had a major impact across the globe. The quantity of crude produced was reduced drastically, creating a domino effect.
We have seen that Nigeria is trying to diversify away from oil by promoting gas. The Nigerian Gas Flare Commercialization Programme was a good kick-start for this journey. Despite Nigeria being a gas country with some oil in it, the oil has been easier to extract. The current low-price scenario is highlighting the need to accelerate the gas transition.
With the Covid-19 pandemic, it has been difficult to push business forward and move people around. The marine industry has, in turn, been affected. A lot of vessels have been inactive because drilling works have stopped. Nigeria usually has about 10 rigs working but now we just have two. The marine sector supports the oil industry, so when the oil industry sneezes, we catch a cold.

What potential does the Niger River hold as a transport route from Port Harcourt to Lokoja?
There is a lot being done. When it comes to upgrading our ports, Julius Berger recently refurbished a portion of the Warri Port. Warri Port is one of the oldest Nigerian ports. She cannot be dredged because there are oil pipelines on the riverbed to the port. We are planning a whole lot for the Niger River. Onitsha Port has just come into play and the Lokoja Port might also be up and running in about a year [Q4 2021]. The Ajaokuta river port will start operating any moment we have ship/barge operators ready to come on board.
Considering these milestones, we are the only group that is set up to provide shipbuilding for this route. Thanks to our new shipyard, we will start to build special vessels in 2021 that will take cargo from Port Harcourt or Lagos up the Niger River all the way to the north, to Lokoja. To this end, we have partnered with NEXIM [the Nigerian Export-Import Bank] to build and provide the right size of ships that can navigate the river, transporting cargo. These, of course, have special specifications, differing from the deep-sea big-tonnage vessels.

What type of vessels are you looking to fabricate in these coming years?
We are looking into shallow-draft tankers and shallow-draft container vessels as these are the ones able to carry containers from Lagos to Lokoja. Our aim is to stick to what we do best, the low-hanging fruits. We will start fabricating these types of vessels before thinking of other types. As for ship ownership, we have a fleet of four vessels.

What importance does Capricorn Marine give to local content and in-house crew training?
In Nigeria, we have the cabotage vessels system. The cabotage law states that vessels that will be used for the cabotage trade should be built in Nigeria. They also have to be manned by Nigerians and bear the national flag. The problem is that as the oil sector skyrocketed, the demand was so high that companies had to get vessels from abroad to work.
We are at a point where we need to go back to where it all started: build in Nigeria, crew with Nigerians and be Nigerian-flagged.
From here, Capricorn Marine Group is the only group that is ready and able to provide crew training. Since the Nigerian National Shipping Line died, there have been no dedicated sea service crew training vessels. We currently have two vessels for sea service training so that the crew and lecturers can be onboard. They navigate West Africa right up to Dakar and then down to Namibia.

To what extent are hose repair and recertification important for the oil industry and for Capricorn Marine Group?
The Nigerian oil and gas industry has hoses that are over 15 years old and need to be repaired or replaced. We are the only company that has a hose repair equipment setup. Our technology was brought in from Italy and is manned by locals. We can service the array of FPSOs and FSOs in this country. Moreover, it normally takes more time and money to bring the hoses to our facility to repair them than to repair them in situ, which can take weeks. With our OSV [offshore support vessel], we can test, repair and recertify hoses, including deep offshore.
Everyone uses hoses but they are costly. One may cost you USD 80,000 depending on the size. For instance, if you have a 24-inch-diameter hose, 9 metres in length, each time you have a leak, that hose may cost you USD 100,000. Not only that, with a damaged hose it becomes impossible to load or discharge your FPSO, which means that they are an essential piece of equipment. In the past, companies used to have redundant hoses but now with oil prices going down, this strategy is uneconomical. This is where we step in and offer repair and recertification, which costs you around 10% the price of a new hose.

What inroads have you made in servicing diesel outboard engines for the Nigerian oil industry?
One of the biggest problems in the industry, especially in the upstream segment, is spark-ignited petrol engines. It is not uncommon to receive reports of boats servicing oil companies catching fire. For this reason, we offer diesel outboard engines which, although more costly, are more reliable. In this arena we represent our principal Yanmar Marine of Japan and we have supplied these diesel engines to boats operating and servicing the upstream IOCs. We have been ahead of the curve in this regard as the application of these engines to the Nigerian oil industry will become widespread in 2021.
This inroad started with Coventry Climax 25-hp diesel outboard engines, made in the UK, in 2002, but now we are supplying and maintaining the Yanmar 50-hp Dtorque III Nm, diesel outboard engines. A diesel engine is more efficient than a petrol engine. The Nigerian oil industry does not require a 150-hp or 300-hp diesel outboard engine and that is why we think that our latest 50-hp diesel outboard engines matches the market needs.

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