Nigeria’s project pipelineAugust 3, 2018
Kayode Adeleke, the CEO of RusselSmith Nigeria, talks to TOGY about incentivising upstream developments, competing with international companies and enhancing local content policy. RusselSmith Nigeria is a local integrated oilfield services company.
• On outlook: “The industry is gradually stabilising from where it was two years ago, and we expect that there will be more opportunities for service companies.”
• On investment: “Nigeria still has its challenges with infrastructure, systems and the investment climate. That is where the government can do a bit more by creating the right environment and improving security and power infrastructure. If there are too many variables, investors become reluctant.”
• On local content: “If the government can identify a few companies that have a good history of building local technical capacity and being innovative, it should partner with them and form a working group that channels its energy into local innovation. There are a lot of brilliant minds here.”
• On funding: “Multinationals have more access compared to local companies. Many of them have parent companies in other parts of the world that can help them sustain even in hard times. It is quite challenging for local companies to compete.”
Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find an abridged version of our interview with Kayode Adeleke below.
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What is your outlook for the coming year?
The industry is gradually stabilising from where it was two years ago, and we expect that there will be more opportunities for service companies. For us, one of the good things about the downturn was that there was also a shake-out. Companies that had not exhibited a high level of quality and excellence over the years were more negatively impacted than companies that had high quality standards in their systems. For us, that period separated and differentiated companies that were ready to take on the challenges and those that were not.
There are more investments coming into the country, which means new projects. We are already working on quite a number of projects, bids, tenders and opportunities. New fields are being discovered and planned for assets, and we are optimistic about the upcoming projects – there are quite a number of them.
RusselSmith is gearing up for the full take-off of its aerial inspection and survey services, which will use unmanned aerial vehicles to perform inspections and surveys, and we are very excited about the possibilities that this technology brings to the market. For us, this will be an interesting year.
What are your main growth challenges?
Obviously, when it comes to funding, multinationals have more access compared to local companies. Many of them have parent companies in other parts of the world that can help them sustain even in hard times. It is quite challenging for local companies to compete. You need to stay committed to your strategy of innovation and quality, and not just be an agent. You need to be a value-adding organisation as a company that is important and critical to the system. That way, you stay in the game. The advantage if you stay focused is that you might be able to respond quicker and more cost-effectively than the multinationals. It is a painful journey, but if you stick to it, the rewards are there.
What could the government do to incentivise exploration and production?
The truth is, the industry is defined by supply and demand. If a global event affects prices in a positive way, then producing companies have a lot more revenue, which they can use to expand their activities, build infrastructure and so on. But, when there is a downturn and it has a serious impact on the country, naturally the companies and country are more reluctant about development and growth. They look for ways to drive down cost.
Nigeria still has its challenges with infrastructure, systems and the investment climate. That is where the government can do a bit more by creating the right environment and improving security and power infrastructure. If there are too many variables, investors become reluctant. They need a clear vision of what will happen to their money when they invest. The government knows this, but it is something it has to work on. In terms of supporting local development, there needs to be a means to provide better access to cheaper funds.
How do you think local content policy should evolve?
If the government can identify a few companies that have a good history of building local technical capacity and being innovative, it should partner with them and form a working group that channels its energy into local innovation. There are a lot of brilliant minds here. Companies like Google and Facebook come here to pick up talent, and we have technology companies like Andela which are helping to nurture world-class talent in software engineering. This can be done for other areas of the economy.
We can focus on areas where we still need innovation and give people real-world problems to solve using technology and innovation. If some funding is put into that, then we will see change in a few years. These things take time, investment, consistency and discipline.
Building local capacity is a lot of work, but it is not impossible. The hard work that is being done behind the scenes has a lot of backing. We cannot afford to be left behind. A lot is going on in the world. We need to move from being consumers to actually creating solutions for our own problems.
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