Built for challenges

Nigeria

Yemi Gbadamosi, CEO of TAG Energy, talks to The Energy Year about expected trends in activity, the need for continued production and how Covid-19 has supported local content initiatives. TAG Energy is an integrated services company that offers oilfield products and support services to the Nigerian oil and gas industry.

This interview is featured in Nigeria Special Edition: Crisis and Resilience in the Covid-19 Era.

How has TAG Energy maintained operations throughout the Covid-19 crisis?
TAG Energy was built for challenges. Established in 2007, we grew during the 2008-2009 economic meltdown. Resilience has been one of our biggest strengths, on both the individual and business entity levels. We manage our resources optimally; we run a very lean and agile business model that promotes the use of technology, systems and processes.
We started an initiative to make a custom-built portal about three or four years ago. We were certain it would bring increased efficiency to business and revolutionise the way we respond to our clients. Now, everything is on our portal, from our HR systems to our accountant’s systems and visitor booking.
Even before Covid-19, we were looking at the possibility of remote work. I travel a lot and need to know what is going on while I am on the road. We also have many women on the team and are prepared for their maternity leave. We have a management system in the cloud that everybody can access. We hire remotely and employees work from home.

How will the current environment affect activity levels in the services sector?
We are not expecting more activities in maintenance. These are expected to be scaled back. Shutdowns are ongoing and most routine activities are being combined into one major shutdown. It is easier for them to do so, as bringing people in and out to work on these projects is difficult. Nigeria is still dependent on foreign expertise to support activities in the upstream and midstream sectors.
Purchases are also ongoing. Our business has grown exponentially. We added French company Valco Group as one of our major partners. They support us in valve maintenance and assembly in Nigeria. We also added Rockwool as an OEM partner in preparation for Train 7. We have seen a lot of business because of these productive collaborations and we hope many projects will continue to move ahead.
All in all, we have seen a drop in requests from some of our customers, but we continue to see a steady flow of business. They need to continue to pump crude even if the price is negative.

Will investments in Nigeria’s hydrocarbons community drop due to low oil prices?
We are hoping major investments will not be affected. The general belief is that crude will stabilise between USD 40-50 per barrel by the end of the year. Investment needs to continue. Nigeria needs to increase production levels, and to do that more investment in the sector is required.
The government wants to boost the local power generation sector, so a lot of gas will be required. Nigeria has more gas than oil; investments in gas are already paying off. TAG Energy will continue to invest to support the gas strategy. If you are in that space, it will pay off if you are offering high-quality services. However, it is still extremely competitive. You will have to fight for it.

How have local content laws supported your success in the services sector?
There is no doubt that a company like TAG Energy would not have survived without local content laws. There are challenges though, such as resistance from some parties that have working relationships with international entities. However, we continue to advocate for the need to evolve Nigerians and Nigerian businesses in all aspects. The Nigerian Content Development Fund offers great support.
Covid-19 is a huge promoter of local content. We now must be independent and self-reliant; we have no choice. A key element of local content laws is the deepening of knowledge and increasing local participation to improve capacity. This not only applies to manufacturing, but to service delivery as well.
We must continue to develop the country by making all industries self-reliant. Knowledge transfer and support of IOCs, the government and even foreign manufacturers are required. Ultimately, the relationship between a foreign giant and a local entity should pay off for everybody in the long run. It is a better way of ensuring and sustaining value.
Travel is impacted now. The old idea of moving people around the world greatly complicates work programmes in oil and gas. Discussions are ongoing on setting up a state-of-the-art valve maintenance facility in Port Harcourt, including mobile units that can be mobilised to client sites.

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