Visible opportunitiesAugust 11, 2016
TOGY talks to Bank Anthony Okoroafor, the chairman of the Petroleum Technology Association of Nigeria (Petan), about strategies for contractors to survive the oil price drop and the importance of expanding local content and development for security. Petan is an organisation of indigenous oilfield services companies working to advance the hydrocarbons industry in the country.
How are the member companies of Petan addressing low oil prices?
The best plan we have for now is contractor financing. We are in an environment where companies do not have money to spend, and Petan members have equipment: rigs, logging units and virtually all of the service equipment for well intervention and well completion. We are offering the clients, as long as they have proven reserves, the equipment to get their wells to produce. We will then get paid down the line. That is the only way to survive right now.
Deferring the payments puts our members to work, utilises the equipment and gets companies back working more quickly. Since the banks aren’t lending, it is one of the options we are offering to many companies. It’s key. If they tell you that they don’t have the money, you can sit down and offer the equipment they can use as long as they have the proven reserves.
What criteria are you using for the seal of confidence Petan is developing?
We are trying to create the standard. Once we give you our seal of competence and quality, you can do that job anywhere. That is a real way we can assure a measure of competence and capability within the country.
Let’s talk about logging. There is a competency matrix for delivering logging services. There is a beginner, middle and advanced level. You must pass through that process to receive the seal of confidence and quality. In that way, we’ve institutionalised this capability and confidence matrix. It is not based on intuition or subjectivity. It is clear and everyone knows what is required.
We are doing this to basically remove the briefcase-carrying companies. Once we remove them, we can say who is delivering logging services, well head maintenance or fabrication, and everybody will understand their competency levels.
How will these performance matrices assist in reducing the contract and tendering time?
We want things to be easier. We want to streamline which companies are capable. This will reduce the contracting cycle and costs considerably, and we can accurately start looking at whether there is a gap, where it is and how to close it.
What policies should be put forward for the Petroleum Industry Governance Bill?
First of all, we want an environment that will attract investments, create opportunities and employment, and grow the economy. As long as the fiscal policies in the PIB [Petroleum Industry Bill] are clear, consistent, auditable and sustainable, it will create what we are talking about.
The executive secretary of the Nigerian Content Development and Monitoring Board has talked about reaching outside of the oil industry and moving local content to other sectors as well. How would this affect the market?
It’s a great idea because if you look at oil and gas spending, it isn’t that much. The oil and gas industry contributes 15% to the GDP. Let’s look at the other sectors and see if we can apply it to them. It requires discipline. It will not happen overnight, but step by step, with consistent focus, knowledge, understanding and commitment, it can happen.
On the cost side, it is cheaper. One Nigerian engineer costs less than USD 6,000 per year.
What new areas are Petan members expanding into?
People are trying out a lot of different things. A couple of our members are moving seriously into power. Petan is an energy focus group. We are in midstream, downstream, upstream, and power. We are looking at all of the sectors, and we are encouraging members to grow capability and capacity.
We are mainly upstream, but we are also in midstream and downstream. There is a lot of focus on power, particularly gas, and I believe it is the future.
With the recent vandalism in the Niger Delta, where does Petan fit in helping with security measures?
Energy security is multi-faceted. If you create an energy corridor in the Niger Delta, people will see visible opportunities and we will not have problems. If you have an energy corridor, let’s say six modular refineries, there will be massive employment and the gas coming out will provide electricity to the community there. If that happens, who will vandalise your lines?
Everyone can see visible developments and opportunities being created. When you set up things like that around the community, you are setting up entrepreneurs throughout the value chain. If people can open filling stations to sell fuel, they will discover this benefits their communities. I believe creating development is better than having people with guns because at the end of the day someone can come and bust a pipeline once the security team leaves. It is impossible to protect these facilities, and that’s why we are trying to change the thinking about that.
What is the NLNG or Seplat model?
Have you been to an NLNG town? It has a 24-hour power supply. There are several entrepreneurs there, and they’ve built skills around their communities. I did a lot of services there, and we didn’t need to bring workers because they supplied skilled ones. They ensure protection of their facilities through community development.
When someone makes money from doing a service there, it is more for honour. In many communities, people don’t work. There is nothing to look forward to, there are no lights and there is no source of income. We should be looking more at creating opportunities everyone can see. That’s key. Let’s not say, “We are taking care of people and filling their pockets,” because people can’t see that.
What are your plans for the rest of 2016?
We want Petan to be the lead consortium of EPCI projects. We want the seal of competence and quality to be on the ground before the end of the year. We want more contractor financing models.
We want to create service company champions in all the different technological interest groups. If you come to EPCI, there is a great champion. If you come to logging, there is a champion. If you come to well completions, well interventions and different technology groups, there are champions. That’s what [South] Korea did. There are champions with so much capacity. Not everyone can build all their capacities at the same time. We need to create those champions, and I hope everyone will aspire to be those champions.