Changing the narrative around local companies

Nigeria

Maxwell Oko, Eraskorp Nigeria’s group CEO and executive vice-chairman, and Florence Okoli, its group managing director, talk to The Energy Year about Eraskorp’s footprint in the Nigerian energy sector, as well as its growth strategy and recent operational achievements. Eraskorp Nigeria develops projects in gas, manufacturing and infrastructure, while also offering security services for energy assets.

Can you give us an overview of Eraskorp’s company structure?
Maxwell OKO: We started activities as an engineering, procurement, construction, installation and services (EPCIS) provider in the oil and gas sectors. Throughout the years, we have expanded our operations and have created several subsidiaries under the group name of Eraskorp Nigeria.
Erasko Energy is the EPCIS company transitioning into a full-scale gas processing entity. Eraskon, a joint venture between Eraskorp and the NCDMB, is focused on lubricants and chemicals and is currently developing a lubricants blending facility in Bayelsa State. Facilities Protections Services Limited (FPSL) is focused on the security of critical oil and gas assets.

What is Eraskorp’s growth strategy?
Florence OKOLI: We believe that our strength lies in our capacity to diversify and leverage our specific skills, as well as our competitive advantage.
We have acquired 50 hectares of landmass for the siting of our industrial manufacturing complex (IMC). We are currently focused on developing our flagship project, a 64,000-litres-per-day lubricants blending facility with plastics and packaging manufacturing lines incorporated as part of the facility. This is just phase one of the project. Phases two and three will extend this project to the manufacturing of chemicals and household products.
Our long-term vision is focused on petrochemicals manufacturing. As part of our long-term strategy, we plan to develop a gas-to-liquids [GTL] plant which will be co-located in the same IMC as the lubricants blending plant to ensure vertical integration, as the GTL plant will produce critical feedstock for the lubricants and chemicals plant.
We recently concluded feasibility studies for the development of an LPG processing plant as part of our strategy to participate in the ongoing gas transition agenda. This LPG processing plant is also a first step in our plans to develop a GTL plant to facilitate required integration, as mentioned above. We are starting with the LPG processing plant for now, due to the huge requirements for scale (both in gas volumes and capital expenditure) for the viability of the GTL plant.
We are also building some optionality into our plans. For instance, we realised that most lubricants plants in Nigeria don’t run at 100% capacity because they have a heavy reliance on imports of raw materials. We want to attempt to overcome this critical challenge by establishing our refinery to ensure we are less prone to external market shocks.
A study to identify high-API crude oil sources near our industrial park is ongoing. We also want to understand the suitable refining capacity that will give us commercial value. Once the study is completed, we will engage with the relevant stakeholders. The optionality here is that we will evaluate whether we want to pursue the LPG plant or the modular refinery to meet our feedstock (base oil) requirements for the lubricants blending plant, based on which facility is most feasible at a financial and operational level.
The plan is to have a ground-breaking event for one of these two facilities as well as the lubricant plant commissioning in December 2022 or, at the latest, by the first quarter of 2023.

What are the most recent operational updates regarding your lubricants and blending plant?
FO: In March 2021, we had the ground-breaking ceremony. Most of the materials are already in-country for construction and are currently being cleared for onward transportation to the site. The contractors have been mobilised and will commence construction soon.
For the process equipment which is being fabricated outside the country, we are getting ready for the second acceptance test, which will occur in the second quarter of 2022. Once completed, they will be shipped and installation of the process equipment in the factory building will commence. All the raw materials for the civil works for the foundation, factory building and storage tanks are already on hand.

How is Eraskorp planning to penetrate the Nigerian lubricants market?
FO: We have deployed an early trading marketing strategy to introduce our products to the market ahead of the completion of our lubricants blending plan. We are currently producing our lubricants through a third-party toll-blending arrangement. Our marketing team is currently focusing on identifying and engaging distributors across the country. Our competitive advantage lies in the top-notch quality of our product.
The plan to become self-sustainable in terms of raw materials will allow us to have an uninterrupted supply chain network capable of servicing the entire country without significant disruptions. Lastly, our prices will be competitive and aligned with the current market.

MO: It will take some effort to get customers to switch from widely accepted international products to our lubricants. The main barrier local companies are facing right now is the perception that their products are not as reliable as the ones provided by the IOCs. We developed this plant to demonstrate that local companies can deploy world-class facilities with international quality standards. We appreciate the support of the Nigerian Content Development and Monitoring Board (NCDMB), our partners on the project as they have been, and continue to be, collaborative throughout the entire process. Eraskorp will compete with the best lubricants manufacturers not only in Nigeria but also regionally.

What are the plant’s key competitive advantages?
MO: The plant will be the first of its kind in the southern region, creating a first-mover advantage. Our facility is an end-to-end solution that will provide a complete range of services. We will provide both blow moulding and blending processes, while currently, most companies are forced to seek out these services from two different sources. On top of this, we will provide security seals and capping, making us a proper one-stop solution.
Our turnkey capability will hugely impact Nigeria because these services and products are currently being imported. Nigeria imports 1 million litres of lubricants annually, and our plant will have a total capacity of 64,000 litres per day (with the potential to increase to 128,000 litres per day based on a double-shift approach). Regarding job creation, we will start with 200 workers directly employed in the plant, while having 800 indirect workers in associated services such as retail and transportation.

What is Eraskorp’s footprint in the Nigerian power sector?
FO: In collaboration with our OEM, we have developed an anti-energy theft system called the Intelligent Data Box (IDB), an innovative introduction to the Nigerian power sector. The IDB entails an online meter ordering system. The platform automatically takes the customer to the payment gateway once the order is placed. Once the payment is completed, it will hit our system, and our installation team will go directly to the customer’s house to install the meter. This approach will drastically reduce overall costs and time when it comes to deployment and management of the metering system by digitalising the entire process.
Currently, there is a considerable supply deficit of meters, and this is where we will play a pivotal role. We are currently carrying out inspection of our meters with Ikeja Electric and are awaiting a contract award for the supply of meters to designated locations within its distribution franchise area.

MO: Right now, we are importing the meters, but we plan to establish an assembly plant in Lagos if the market starts to ramp up. It will enable us to deploy more of them in a shorter period of time. The lubricants plant will also support this goal because we will be producing transformer and turbine oil. There is a big appetite for local manufacturing of meters from both the consumer and government point of view because the government is supporting local participation in meter manufacturing.

What are Eraskorp’s current contracts?
MO: We will manage the Nigerian Agip Oil Company’s cooling system for the next two years. We have recently handed over a 10-kilometre by 12-inch pipeline for swamp operations. We are also in contract discussions with the ANOH Gas Processing Company for the construction of storage tanks and the supply of spares for their upcoming plant.
Regarding our security services, we have almost 500 personnel on the ground managing Chevron’s security for another two years. Another company in the healthcare sector requested our security services after they visited Chevron’s facilities, which is a nod to the quality of the services we offer. Regarding pipeline vandalism, we previously deployed our early warning system for Heritage Energy Services, and we are ready to expand our footprint in this area of security for critical oil and gas assets.

Where do you see Eraskorp in the next five years?
MO: Our vision is to have every Nigerian family use at least one Eraskon product – if not our engine oil, then our injector cleaner, carwash or brake fluids. For those without a car, our floor cleaner, air freshener or toilet cleaner. If not, then our LPG for cooking or our meters for in-home electricity.

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