Energies old and new see uptick in Nigeria

Nigeria

Guillaume Niarfeix, managing director of SPIE Global Services Energy, talks to The Energy Year about the SPIE Group’s rebranding process, the Group’s energy-transition strategy and Nigeria’s power and renewables sectors. SPIE Global Services Energy operates across the entire energy production infrastructure value chain, from design to maintenance.

Can you guide us through the rebranding process that the SPIE Group has recently undergone?
Despite having started the transition toward renewable energies a few years back, in January 2024 the Group changed its name from SPIE Oil and Gas Services to SPIE Global Services Energy, as we are in the process of diversifying our business portfolio towards a diverse range of energy services.
It did not make sense to change it until now because our core business is still oil and gas, but at the beginning of 2024, the Group acquired 85% of Correll, a leading player in engineering, installation and maintenance services in the offshore wind sector. This acquisition represented a major step for SPIE in its diversification strategy towards renewable energies, which we implemented to support our customers in their energy-transition endeavours.
In Nigeria, we are not new to green initiatives. SPIE has been one of the major players in solar in the last five years. We have worked on the installation of several sites and grown fast. However, renewables have nevertheless not grown as fast as our oil and gas business, which has been thriving lately.
We are being very proactive in pushing forward the energy transition, both at the Group level and locally in all countries where SPIE operates. This has been the driving idea behind the change of branding which is helping us address new markets. The previous name made it unclear to people that we are active in renewables sectors too.

How would you describe SPIE’s commitment to the energy transition?
It is crucial to look at the energy transition in a pragmatic way. We cannot phase out hydrocarbons abruptly. Instead, we need to start gradually implementing solutions that can diversify the energy mix and attract investors. We need to show that Nigeria is opening up to more sustainable solutions, and it needs to use the money from hydrocarbons to feed investments in green energy.
SPIE is aiming to change most of its car fleet to electric cars, but at the same time, we have to play it carefully because switching to electric doesn’t automatically mean that you are greener. In Nigeria, electricity access is a big issue, and its generation comes with GHG [greenhouse-gas] emissions since electricity generation still relies massively on diesel generators.
In SPIE, we are trying to drive a change through leading by example, as shown by our facilities in Port Harcourt, where we are 100% self-sufficient thanks to our solar capacity. Solar energy is extremely competitive in Nigeria in terms of prices. In other countries it usually takes seven to eight years to see the return on investment on solar installations. For us it took 18 months.
The company is dedicating many efforts to offshore wind developments as well, but I think that the greatest potential sits in PV installations, not only because of the costs but also because of the poor conditions of the domestic network. The production of electricity is extremely decentralised in Nigeria, so it would make total sense to have a smart grid and small, localised solar production.

What is your assessment of the power and renewables sectors in Nigeria, and how has SPIE contributed to them?
The renewables segment is picking up. TotalEnergies, for example, has just launched a 5-MW installation in OML [Oil Mining Licence] 58, for which we bid, but it was eventually awarded to Ponticelli. That area is rich in gas, and it is easier for TotalEnergies to generate electricity from gas than solar, but the bid still shows how operators are keen to step up their solar commitment in Nigeria.
Moreover, Nigeria has good solar radiation, especially in the North, where a lot of electricity can be produced from solar energy. The main challenges for full-scale utilisation are its unreliability and unpredictability. Besides, you cannot install more capacity than what you need because you would need someone to offtake it, and it is not an easy task here given the poor network conditions.
So, the bottom line is that there is an appetite to promote solar initiatives, and although it is not a top priority on the domestic agenda, it will be extremely useful for supporting conventional, fossil-fuel-based power-generation infrastructure in the near future.
The irony is that, besides the great need for stable power in Nigeria, there are companies with capabilities to produce and sell electricity, but there are problems with contract dynamics and unreliable offtakers. Producers want to get paid, and that is why they prefer to sell the power outside of Nigeria, where there are less bottlenecks and buyers are more trustworthy.
Our business model for renewables sees us doing the installation and commissioning of PV modules, mostly for our IOC clients, but we are not in distribution, and we don’t plan to be. In our Port Harcourt facility, for example, we have installed a solar farm of about 200 kW to power our activities, which was a pioneering initiative for the country’s power sector.

How would you rate the momentum the domestic oil and gas industry is experiencing, and what is SPIE’s strategy to take advantage of it?
The domestic hydrocarbons sector is experiencing positive momentum. I believe we will see very large investments coming from IOCs as a consequence of the reforms and the divestment deals implemented and approved by the current administration. Moreover, Nigeria has ageing assets which will require increasing maintenance services, and that is good news for us.
Oil and gas is a capital-intensive industry with high costs, and investing one dollar in maintenance means saving 10 down the road. Operators are fully aware of this, and we are the preferred choice of players such as TotalEnergies and ExxonMobil, for which we have done large shutdowns, including a very successful in 2024, in addition to delivering PPS [process and pipeline services].
As mentioned, we are not keen to work with small independent producers, both because of payment issues and the lack of safety that characterises their operations. Most of these companies do not have the culture of asset maintenance, which makes the facilities, especially gas ones, prone to avoidable risks.
Then, we also do commissioning, as we are one of the largest contractors in the country. We do not really fabricate. We only engage in small welding or get involved in large structure projects, but we have good partners such as Aveon to support us.

Can you provide us with an overview of SPIE’s business portfolio and insights about how the company is tackling the challenging contract dynamics affecting the Nigerian market?
Our bread and butter in Nigeria has always been oil and gas, and this is not going to change in the near term. Operations and maintenance, asset integrity and FPSO full-field shutdowns represent about 60% of our revenue streams.
Then we have about 30% of our revenues coming from projects involving EPC and associated services, such as electrical, mechanical and HVAC installations. Most of this work is coming from the Port Harcourt Refinery, where we are involved in its revamp.
We are among the main providers for O&M services to FPSOs, with around a 30% market share. This share has increased consistently in the past four years, with the Covid period being a large driver behind this growth, particularly when the market started picking up again.
However, we now need to make some adjustments to our business model to align with the changes occurring in the market since, with the current divestments by IOCs, our market in terms of clients we want to work with is shrinking.
In fact, we hardly work with local companies given the risk of not being paid. When you deliver an EPC contract, it is not a big deal since you do not deliver the equipment until you get the money. In maintenance, it is a different story because you have very high upfront costs to cover. That is why our philosophy is to do business with clients we know we can trust, and most of them are international.

What would you say are SPIE’s key competitive advantages?
The way we operate is very decentralised, with each SPIE branch having a lot of power locally when it comes to taking decisions. This autonomy proved to be very useful in times of crisis and slowdowns, as we managed to be much more active and effective than our competition, which had to rely heavily on their HQs to make decisions, which oftentimes do not have a proper understanding of how, for example, business is run in Nigeria.
Furthermore, we deeply value the importance of having local staff. Over 96% of our employees are Nigerians, with some of them covering top management positions as well. During the pandemic, the execution of many projects for other companies relied on expats that were not allowed to come to Nigeria. By contrast, we managed to thrive thanks to our organisation’s structure and the synergies between locals and expats.
Finally, as already mentioned, we are fully aware that in order to succeed you have to diversify, and we are always paying attention to find new ways of doing business while maintaining high standards. Our penetration into renewables is a good example. There is a plethora of players that are trying to get more business in oil and gas as well as in solar, but they operate with very low standards, especially in terms of quality and safety, which are key values for players operating in the energy sector.
We have ISO certifications, and we have been operating for 17 years, with over 20 million man-hours without an LTI [lost time injury]. Such a resume is highly desired from international companies because it means they don’t have to stop operations and lose money when accidents happen.
Our services come with a cost, but for instance, we won the last tender for an international major thanks to our price competitiveness, coupled with our first-class services. Although we can be more expensive than other players in the market, we also bring much more value. We show our clients that, although they might pay more, at the end of the day, they can make and save more money from their operations because they reduce their risks exponentially.

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