Hope and optimism in NigeriaAugust 17, 2020
Ibilola Amao, principal consultant for Lonadek Global Services, talks to The Energy Year about shifting trends in Nigeria’s hydrocarbons industry, how the financial sector can support continued growth and the rise of digitalisation. Lonadek's core competence is in digital asset lifecycle and information management services. For energy companies, Lonadek identifies, develops and engages talent to deploy state-of-the-art technologies for operational excellence.
How has Nigeria’s hydrocarbons industry changed its focus amid the low oil price and the Covid-19 pandemic?
Nigeria is responding bullishly to issues related to the pandemic, the glut of oil supply and the downturn in the cost of a barrel of oil. The country has switched its focus to gas. Although the focus has been on oil for the past 60 years, Nigeria is more of a gas province. With the ongoing OPEC issues, Nigeria is trying to implement its gas utilisation programme.
Energy security is a major issue in Nigeria and the focus on selling crude oil to buy finished products has led to a negative trade balance. Looking at domestic gas and pairing Nigeria with LNG, LPG, CNG, GTL, gas-to-fertilisers and gas-to-petrochemicals will open a new local industrial revolution.
With the monetisation of gas and opportunities created around developing central processing units, it is likely we will have more players bid for non-associated gasfields. This will open new opportunities for indigenous players. The post-Covid-19 environment is going to be extremely exciting for Nigeria and Nigerians. We have been forced to look inwards and think creatively and innovatively about energy security.
The wasteful past of exporting crude and importing finished product must come to an end. Everyone is on their toes now. PETAN [Petroleum Technology Association of Nigeria] members, IOCs, independent field owners and marginal field owners are beginning to pool resources and focus on collaboration, co-operation and co-ordination of in-country resources in order to address energy security issues in Nigeria.
What new projects will carry Nigeria’s energy industry through the expected downturn?
The FID on Train 7 has gone ahead, which created a buzz in the industry. There is a lot of hope and optimism. Saipem and project partners within the consortium are beginning to mobilise for various activities. On the back of that will be the Bonga South West development, which will also keep up momentum in the oil and gas industry in the long term. We should have good news about this development before Q2 2021. Additionally, the AKK [Ajaokuta-Kaduna-Kano] gas pipeline project is ongoing.
The government has been very proactive. New projects will bring a lot of stability to the energy industry in Nigeria. The fear of shutting down operations and losing skilled manpower has been addressed in the short to medium term. The government still must do a lot of work on security and safety if the country wants to see continued growth.
How can the financial industry aid in recovering oil and gas operations?
The reactivation of the industry will come in gradual phases. We are going to see recovery in the cost of oil. Revenue generated on a project-by-project basis will determine which operations continue running. Financiers and bankers should sit down with stakeholders rather than lenders to come up with new business models that guarantee repayment of loans and sustainability of projects.
Considering our negative reputation due to corruption, we need a more transparent business environment and more collaboration and co-ordination of resources. We need to work together. We are going to see more integrated projects where the government, private sector and investors sit around the table and decide how to best structure funding and advance business models.
We need to look at the cost of products on the market and how competitive companies must be able to pay off debts and turn in profit. Some activities will be shut down, and some business solutions will be considered not profitable. We must focus on profitable activities to rise above restructured loan arrangements.
How has the Covid-19 crisis changed industry attitudes towards digitalisation?
Digitalisation before Covid-19 was a product and service that necessitated a push in engagement with clients. Everyone was comfortable with more traditional ways of doing things. However, the importance of converting manual, analogue and hard copy products and activities into digital solutions, platforms and data has now become imperative.
The new norm will focus on digitising records, documents, activities, systems and assets themselves to develop a digital twin. This will be a necessity to run a continuously profitable business, even in more remote areas. We are also going to see more remote working and automated solutions.
There will be more restriction of movement. People are going to have to leverage local resources and digital equipment and data to make informed decisions in real time and online. Digitalisation will no longer be something good to have; it will be a necessity. At the end of the day, we are trying to reduce operation and maintenance costs and run more effective businesses.
The new phase of digitalisation will be an era of automation leveraged by the experience and expertise of industry personnel and professionals. There is no value created by individuals being laid off without having the opportunity to be retrained. There are many successful stories of what we might call STEMpreneurs and TECHpreneurs, who are experts in STEM [science, technology engineering and mathematics] and TECH being retrained to convert issues, problems and challenges into opportunities.