Geoplex eyes a fullstream strategy in NigeriaJuly 21, 2022
Wole Ogunsanya, managing director and CEO of Geoplex, talks to The Energy Year about the company’s technological advancement strategy, its foray into the power sector and its position in the FPSO industry. Geoplex is an indigenous Nigerian company offering a wide range of oilfield services.
How has Geoplex built a strong business in the Nigerian market?
We started Geoplex 20 years ago, providing only electric wireline services to the oil and gas upstream sector. Over the years, we became the Nigerian leader in that segment, but we wanted to grow even more, which is why we expanded to well and drilling services. We are the fastest-growing indigenous company in West Africa for three main reasons.
Firstly, we have the right people with the right sets of skills due to our high investment in training.
Secondly, we own our equipment, which is a key competitive advantage. The Nigerian Local Content Act says that contracts on land and swamp should be assigned to local companies, and we are aware that we cannot win each of them. The importance of having our own equipment lies in the relative profit: if you don’t own your equipment, you will need to outsource it, leading to a prospective revenue of only 10-15%. On the other hand, if you own the equipment, you will keep 100% of the revenue.
Thirdly, as a result of keeping most of our revenue rather than outsourcing the work, we have consistently managed to have a good cashflow within our operations. Our finances enabled us to positively navigate the recent downturns of the industry while taking advantage of the upturns. This is why we have remained market leaders in delivering well services as an indigenous company.
What is Geoplex’s business strategy regarding technological advancement?
The global market used to be dominated by international companies like Schlumberger who had access to the newest and most efficient technologies. Over the years, there has been a rapid technological enhancement. Most of the previous oilfield technology patents expired, which fostered the rise of new companies globally. For Geoplex, it meant that we could acquire any technology we wanted from a wider pool of companies at a more competitive cost.
We have the required financial stability to choose the best technologies and the best partner to deliver top-notch services at an international quality standard. Technology advancement also allows for faster deliveries, and time is crucial in the oil and gas sector.
How is Geoplex developing its marginal field licence?
We managed to secure a marginal field in the 2020 bidding round, and we now own 40% of the Ndibe field in OML 67. We are currently developing the work programme field development plan, including production facilities. Together with the owner of the OML, we are planning how to optimise existing facilities to reduce our capex. This optimisation is key to cutting costs because we need to be aware that we will spend close to USD 100 million to achieve first oil.
We are expecting NUPRC [Nigerian Upstream Petroleum Regulatory Commission] to issue the licence shortly. The evolution from DPR [Department of Petroleum Resources] to NUPRC has slowed down the process, and most of the awardees are still waiting for their official licences. We hope to drill our first well by the end of 2022.
What is your growth strategy?
The unpredictability of the oil and gas sector has pushed us to develop a strategy to become a fullstream player along the entire energy value chain. We have entered upstream E&P with the marginal field, and we will most likely build a refinery in the future. We have recently acquired KCA Deutag’s business in Nigeria, now owning five land drilling rigs. KCA Deutag is an international company with 40 years of experience in Nigeria with excellent quality standards. We are already drilling two wells for a client, but we want to grow our market share.
We have also extended our business to the power sector because it has vast, unexplored potential. We are currently working on some contracts, funded by the Central Bank, with the Transmission Company of Nigeria to improve local power delivery. We are an engineering company; we strongly feel that we can use our engineering minds to support power production.
What main challenges are you expecting from transferring your expertise to the power sector?
The main challenge will be to source the right technology and equipment. We want to operate using the same strategy as with oil and gas, meaning that we want our substations to work efficiently for decades to come. We will study the market to understand the best suppliers and who can guarantee us an internationally recognised quality standard.
The second challenge is related to capacity building; we are recruiting power engineers at the moment. Additionally, we are organising training with the original equipment manufacturer to develop the right know-how for engineers and technicians.
What is Geoplex’s long-term plan in the power sector?
We want to begin generating power soon. The recent acquisition of the marginal field will enable us to produce gas and deploy it for gas-to-power activities. Furthermore, as we will be the producers, it will cut costs for our prospective clients. We will need to purchase gas turbines from leading global manufacturers to achieve this goal.
How is the company positioned in the FPSO industry?
We are well positioned thanks to our technical partnership with Yinson; with this, we managed to secure several contracts over the years. Our main activity has been with the Abigail Joseph FPSO with First E&P, which is currently one of the most profitable businesses in Nigeria.
Within our FPSO operations, we have rarely shut down operations; we have successfully delivered 100% of our contracts. Our ultimate goal is to own FPSO vessels to step up our market share. We would maintain our technical partnership with Yinson because they have the know-how and the expertise.
What are your current contracts?
Geoplex has been the only local company that has met the technical requirements to deliver services for SNEPCo. We are going to Mozambique to install our equipment on the deepwater rig coming to Nigeria to fast-track its deployment. We also have contract work with NPDC, Seplat Energy, Chevron, ExxonMobil, Agip/NAOC, Green Energy, Shell-SPDC, Conoil and TotalEnergies and our strategy is to continuously tender for contracts to win the highest possible number of jobs.
What is Geoplex’s regional footprint?
Together with Baker Hughes, we are tendering for a five-year project in Angola. They asked for our support because they trust our capacity and quality service delivery; we will be mobilising equipment in the upcoming months. We worked in Congo-Brazzaville, Ivory Coast and Kenya, where we had a big project awarded to us on Baker Hughes’ recommendation to the client because of a capacity gap. Our strategy is to move our equipment only if there is a demand for our services.
The core reasoning behind this is that local content development is critical in other countries, and we can establish partnerships to foster technology and capacity building there. We already have partnerships with local companies in Ivory Coast, Ghana and Uganda. Many African companies feel they learn more from other African companies instead of partnering with international companies. We are here and ready to help fellow African companies grow and step up their operations.