EPC for the full spectrum of oil and gasApril 9, 2021
Yaro P. Balami, managing director and CEO of Cakasa (Nigeria) Company, talks to The Energy Year about how long-awaited projects will stimulate EPC activities in Nigeria and the maintenance advances the company brings to catalyst handling and metering systems. Cakasa provides services to Nigerian oil, gas and industrial infrastructure clients.
How will some of the long-awaited projects in the industry further stimulate EPC activities?
Most mega-projects in Nigeria, as in most markets, are executed by major international EPC firms that have strong technical capabilities. As for us, we fall into the local EPC firm category, with a strong position in Nigeria’s midstream and downstream sectors. Further, we are now aspiring to grow into the upstream space, and with that become a vertically integrated EPC company covering the full spectrum of the oil and gas value chain.
The industry currently offers plenty of opportunities, seen for example in NLNG Train 7, the AKK pipeline, the Dangote Refinery and the development of marginal fields, which are all projects that will create real value in-country and sustain EPC business for the coming years. NLNG Train 7 will revolutionise the EPC landscape as a large array of companies across the nation will have the opportunity to be involved in it. EPC companies are really positioning themselves to play a key role, either in the design packages, in physical construction packages or on the procurement side.
How important has the Nigerian Content Development and Monitoring Board (NCDMB) been in bridging the finance gap EPC companies have suffered from?
The NCDMB has been elemental when it comes to enhancing local content in Nigeria. They encourage local companies to access funds, which has been a major issue, as most of the local banks are not ready to fund EPC initiatives. In this sense, the NCDMB came in with a clear directive and target. They identified funding as a major obstacle for local companies and chipped in to back them up and enhance their capabilities.
The board has helped many companies to open up larger workshops or to develop experienced manpower, but stipulates as an essential requirement the training of a local workforce. It’s all about creating in-country value and building local capabilities. The oil and gas industry is a high-skill sector, which means that know-how is the most important building block in order to prosper.
What are Cakasa’s most strategic services?
Cakasa has a long trajectory. In the last 40 years, we have worked in all the sub-sectors of the oil and gas value chain. We have proven that we can provide added-value services to the local market, including representing foreign companies in Nigeria by supporting and selling their products and equipment. In addition, we have a full-fledged maintenance department for the products we supply to the oil and gas sector. From here, we have developed a local team that can intervene for routine, ad-hoc and comprehensive maintenance services.
Our journey in the space of engineering started when we set up our own facility [in 2002]. This was a response to the demand for local content that was flourishing in Nigeria. We started with projects such as the  Dibi Long-Term Project for Chevron facilities, but over the years projects have dwindled due to the ups and downs of the oil sector. Today, it is very low and there are not many engineering activities.
Construction is our third major activity, playing a key role in the downstream and midstream ambits. Since 2006, we have developed high competence for LPG facilities, where we have been engaged in the development of coastal and inland LPG infrastructure along with our foreign partners Italy’s Paresa and Makeen Energy France.
The year 2020, declared to be the “Year of Gas” in Nigeria, shed new light on the urgent need to supply gas across the country. Some of our clients, such as Rainoil and Techno Oil, commissioned their respective 2 x 8,000-cubic-metre LPG storage facilities, built by Cakasa with an EPC project delivery methodology, and are now at the forefront of the drive to deepen the utilisation of LPG in Nigeria. Other coastal storage facilities are being developed and this is in addition to the development of internal bottling plants to help distribute gas to end users. This is a very interesting space for us and we are determined to add real value to the developments in place to make Nigeria a haven for natural gas.
What impact is Nigeria’s gas commercialisation scheme having on Cakasa’s business scope?
The gas business is very diverse in Nigeria. Apart from LPG, we also have propane, which is used for industrial services. If we were to look at the Nigerian oilfield map, most of gas-rich projects – like ANOH [Assa North-Ohaji South] by SEPLAT, Utorogu by Shell and the recent Oredo Integrated Gas Handling Facility commissioned by NPDC [Nigerian Petroleum Development Company] in Edo State – have developed their plants to commercialise and supply it to industrial users.
The government is investing heavily in the monetisation and utilisation of LPG to cover the growing demand for this product. As an example, we have the push to implement autogas, which will require the equipping of filling stations across the country – DPK [dual-purpose kerosene] units are moving out and being replaced by autogas ones. The same goes for trucks, which are being converted to CNG and autogas.
As an EPC company, we are called to provide solutions for these growing trends. We are now positioning ourselves to play a key role in the autogas business. We have linked up with Tatsuno Corporation from Japan, a manufacturer of fuel dispensers for gasoline, diesel, LPG, CNG, etc. Our aim is to bring to the market regular dispensing pumps for PMS [premium motor spirit] and the required equipment to install autogas in filling stations across the nation.
What importance are you giving to the areas of retail station and lube plant construction?
One of the areas we are investing in the most is downstream. Profit margins have moved from the depot to the retail stations. As a result, there is an uptick in filling stations being developed. We build state-of-the-art retail stations. For example, in June 2020 we finalised a top-notch retail station for Northwest Petroleum in Lagos. This ultra-modern facility took about 12 months to be completed. We are looking to expand our footprint in the construction of retail stations moving forwards.
We are also interested in solidifying our presence in the lube plant construction business. We did the bidding for a plant and we are working with Northwest Petroleum on the engineering phase. You see, the entire transport system needs lubricants and we have seen a growing trend in this direction coming from our clients. This is not to mention the number of vehicles Nigeria has. Also, the construction of in-country lube plants will halt the import of this product. As a result, we have positioned ourselves to be part of the development of lube blending plants in Lagos, in Kano and across the country.
What recent works has Cakasa carried out in the area of LPG spheres?
As noted earlier, we constructed the LPG facilities for Techno and Rainoil, each being 2 x 8,000 cubic metres, and we also recently built a 10,000-cubic-metre LPG storage facility for Dozzy Oil and Gas in Calabar, which is ready for commissioning. We have constructed five different spheres in the last two years, which is a clear reflection of our commitment and strong positioning in this area.
At the moment we are working on three other LPG facilities, hoping to finalise FEED works and move on to the detail engineering stage as well as the procurement and construction phase within the next two years. One of these is an addition of a sphere at Port Harcourt, while the other two have just started construction, and are in Warri.
What involvement did you have in Dangote’s fertiliser plant construction?
We were involved in the construction of an ammonia tank (cryogenic tank), with a capacity of about 31,982 cubic metres, a height of more than 28 metres and a diameter of around 38 metres. In this particular project, we undertook the role of subcontractor to Paresa, who at the same time were subcontractors for Saipem, who had the global contract. Our responsibility was to mobilise all the manpower and equipment to build the tank, which is the first of its kind for Cakasa. This project was concluded in a period from 2016 to 2019.
What maintenance advances do you bring to the areas of catalyst handling services and metering systems?
Maintenance is one of our core business units. Not only do we supply products and equipment, but we also provide after-sales support service. In this area, we have achieved competence and leadership and have been able to harness global maintenance contracts with major IOCs, out of which one of our outstanding services is catalyst handling. Natural gas produced by ExxonMobil or NLNG has impurities such as hydrogen sulphide. This gas is processed in a chemical compound that absorbs the impurities and produces dry gas.
We render those services to provide the new chemical compound through partners such as BASF and UOP. Cakasa, through its UK-based subsidiary Technivac, has the technology to safely remove this chemical compound without the need for physically entering the vessel, which is a health risk. The vessel can be as high as a two- to three-storey building, and we remove the compound through a vacuum process. As a testament to our competence and leadership in this area, we have been providing catalyst handling services for NLNG and IOCs such as Chevron and ExxonMobil.
The second major area of our competence and leadership in maintenance services is the metering systems. All the crude that is produced must be accurately metered in compliance with the Department of Petroleum Resources (DPR) regulations. We’ve been working with TechnipFMC in this area for decades, supplying meters and maintaining the installed meters in the different oil and gas terminals – Escravos, Forcados, Brass and Bonny. We also have a contract with NPDC to maintain most of their meters and certify them.
So, we supply all the crude oil metering systems, which are accurate and reliable. Along these lines, we have invested in the FlowLab facility located in Port Harcourt, where we recalibrate and recertify all the meters we import from OEMs in the USA.
How important is it to be a turnkey EPC provider in the current environment?
Most clients do not like to have responsibility divided among their contractors. To respond to this need, we’ve transformed ourselves into a one-stop shop, which means that we can take responsibility for everything from start to finish. Most of our clients find this is the best solution. It’s a good model because while the contracting counterpart is thinking about business strategy, they can rely on a contractor to solve all the technical issues for them.
What growth projections do you have for Cakasa in 2021 and beyond?
Firstly, we intend to spin off our maintenance services into a full-fledged subsidiary company that will devote all its efforts to maintaining ageing facilities. At the same time, we also want to become a fully vertical integrated company by solidifying our EPC presence in the upstream sector. Lastly, we do not want to limit ourselves to oil and gas, as we also want to delve into areas such as civil construction, infrastructure and power. These are the three new areas we want to work on from 2021 to 2029.