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 sector. 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 Nigerian Content Development and Monitoring Board (NCDMB), is focused on lubricants and chemicals and is currently developing a lubricants blending facility in Bayelsa State. Facilities Protection 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 strengths, as well as our competitive advantage.
We have acquired 50 hectares [500,000 square metres] of landmass for the siting of our industrial manufacturing complex (IMC). We are currently focused on developing our flagship project, a 64,000-litre-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 will also serve as an intermediate step in our plans to ultimately develop a GTL plant towards facilitating required integration, as mentioned before. 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 do not run at 100% capacity due to a heavy reliance on importation 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 modular refinery ensures optionality with respect to our feedstock (base oil) requirements for the lubricants blending plant.

What are the most recent operational updates regarding your lubricants and blending plant?
FO: In March 2022, we had the ground-breaking ceremony for the plant. The construction work for the foundation is in progress. The steel materials for the IMC super structure are already in the country and the contract for the construction has been awarded. The fabrication of the process equipment in India is about 80% completed. The initial batch of process equipment has been shipped and is in-country awaiting Customs clearance while the factory acceptance test for the second batch was completed in the third quarter of 2022. We are working towards the successful completion and commissioning of the plant.

How is Eraskorp planning to cement its position in the Nigerian lubricants market?
FO: We have deployed an early trading strategy to introduce our products to the market ahead of the completion of our lubricants blending plant. 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. We are excited about our entry into the market and our potential for success. Our competitive advantage lies in the top-notch quality of our product, which will establish our reputation in the market. Furthermore, the plan to become self-sustainable in terms of raw materials will allow us to have uninterrupted supply capability, enabling us to service the entire country without significant disruptions. Lastly, our prices will be competitive and aligned with the current market.

MO: We recognise that 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 NCDMB, our partners on the project, as they have been, and continue to be, collaborative throughout the entire process. We 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 South-South region, creating a first-mover advantage. Our facility is an end-to-end solution that will provide a complete range of services. It will have both blow moulding and blending processes, which is unique, as 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 instal 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. Following a rigorous quality review and inspection process, we have been awarded a contract by Ikeja Electric 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 with the government actively supporting local participation in meter manufacturing.

What are Eraskorp’s current contracts?
MO: We have been managing the Nigerian Agip Oil Company’s cooling system. We will also be handing over a 10-kilometre by 12-inch pipeline for swamp operations. We have been awarded contracts by 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 Eraskorp 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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