Focus on the futureJuly 14, 2020
Kolapo Sodeinde, managing director of Aerial Robotix, and Tudor Moss, the company’s CTO, talk to The Energy Year about the difficulty of dealing with rate reduction requests and maintaining supply chains and training pipelines with travel restrictions in place. Aerial Robotix is an indigenous company that provides UAV services in the West African region.
How do you assess the impact of the current crisis on Nigeria?
Kolapo SODEINDE: The challenges are similar in many developing countries. Covid-19 testing is currently quite low, which is an obvious issue moving forward in locating people who are infected so as to stop the spread of the virus. It has trickled down to the oil and gas industry in such a way that the IOCs are still trying to figure out the protocols for getting people to work offshore while stopping the spread if people get infected.
Until they figure this out, there is not going to be too much movement. Only essential work can be done now. Even exploration is slowing down a lot as the industry focuses on production and maintenance. Of course, the oil price drop didn’t help, especially when coupled with Covid-19.
Tudor MOSS: Oil and gas is our biggest market, and all the projects that were lined up for this year are on hold. Oil and gas companies are trying to find a way to get people offshore. Some people are stuck offshore as modes of transportation have shut down. There are very few crew changes because they can’t bring people in and out. If we want to go offshore, then our personnel have to go into 14 days of isolation.
Because the oil price has crashed, clients are asking for relatively large reductions to soften the blow, which is understandable. The same happened in 2014/2015 when everything was cut by 30%, so after five or six years we have come full circle, while trying to maintain the same level of service.
I believe that some IOCs will put exploration on hold until 2021 while they focus on maintenance and production. They will be looking for cost savings in line with the current climate, so they would benefit greatly from the use of UAVs for inspection, which is the core of our business. There is still a potential market if we can get our personnel out there to do the inspections.
We have also spent weeks talking to multiple medical facilities to do antibody tests in preparation to mobilise when need be. We did some tests which turned out negative and were confirmed to go offshore, but then suddenly everything was put on hold as the available antibody tests are only 80% or 90% accurate. Because of the global uncertainty, people are reluctant to make decisions based on today’s information.
What new technologies can you offer to clients to optimise costs instead of using rate reductions?
TM: Over the past two years of our operations, we have been introducing new technologies in Nigeria. Technology advances daily, and everyone in this sector around the world is looking for newer technologies to do things quicker and more efficiently, which ultimately cuts costs. We know our clients want this, but they are now so busy dealing with Covid-19 that they don’t have much scope to discuss new opportunities. Once borders open up again and the virus is under control, the world economy will start to recover and we are optimistic that these new technologies will be revisited by our clients.
We still have a skeleton team working in the office because we have to continue with training and maintaining our equipment. We have incurred costs during this period for maintaining safety as well as skill sets, even though no work has been coming in.
KS: While everyone is busy dealing with Covid-19, our clients have scaled down their operations. In this situation, it is hard to get any of them to definitively say what is planned for us in the near future. This puts us in a difficult position, as we have been looking into new equipment for extra cost savings and efficiencies, but like everyone else, we are still in the dark regarding the commencement of work.
Since our sector is new in Nigeria, some of our issues are the lack of trained indigenous pilots and the purchase of foreign equipment. So, a large portion of our costs are foreign. We have had to look into reducing rates while increasing our expenditure through the purchase of new equipment. This new equipment has many advantages, but the biggest is the reduction in operational hours, which brings about cost savings to the client.
We understand the issues going on in the world right now, so we try and do all we can in catering to our clients’ needs while still offering the same quality of service. It is very difficult to make those cuts, but it is something that we and most other companies cannot avoid.
How challenging will it be for Nigeria to develop a robust local supply chain for your sector?
TM: We can train teams and people, but when it comes to purchasing equipment or manufacturing within the country, I think that is still some way off yet, although the country is moving forward in leaps and bounds in this respect in more established sectors.
KS: On the technological side it is going to be very difficult. This gives us an opportunity on the training side to ramp up our training schedule. We previously sent people to Europe to get extra training, but now we are trying to revamp our training schedule locally and get more Nigerians to become pilots and surveyors. I think this is the way forward for now, until our sector matures to the extent where it is more feasible to manufacture in-country. When this happens, it should bring additional cost savings as the devaluation of the naira always has a negative impact on the purchase of foreign goods.
Are there any key projects in the industry that might present opportunities for you in the future?
KS: Potentially, the majority of them. Even before they start, inspections and surveys have to take place. Our clients know the kind of service we deliver. We have already done surveys and inspections for these companies, so they know our capabilities. We are in constant contact with our clients and they are eager to deploy our services, but the uncertainty of this pandemic has left a lot of things up in the air. All in all, there are opportunities for sure, but we don’t know when they will be realised.
How confident are you in the country’s energy future?
KS: First of all, Nigeria has to tackle the maintenance issue. Production needs to be ramped up, which will be very difficult without a solid maintenance programme. It also looks like the oil price is not going to go back to previous levels anytime soon, so it would be prudent to focus on maintenance and incrementally increase production to sustainable levels.
TM: People need to look at the lifespan of the assets they have. I believe some companies are already looking at the extension of their assets’ lifespans, and others will follow since they are likely to suspend near future exploration. They will look at which asset is profitable and what needs maintaining or upgrading.