Compliance and local content

Equatorial Guinea

Alfredo Jones, the managing director of Alduco Engineering Services, speaks to TOGY about the challenges in the oil and gas industry in Equatorial Guinea, meeting international standards as a local company and the experience of working before during and after the local content regulation was enacted a few years ago. Alduco Engineering Services provides technical services for companies such as ExxonMobil.

Can you give an overview of the current status of the company and any current contracts?
The company was set up in 2002 to provide technical services to the oil and gas industry in Equatorial Guinea. We were given our first opportunity by ExxonMobil, and now we work with all of the IOCs operating in Equatorial Guinea. The way we differentiate ourselves from a lot of other companies is that we provide technical services to the oil and gas industry. We are able to do this because we employ a team of highly skilled local engineers and technicians in addition to a few highly qualified and skilled expatriates.

You have the unique experience of having operated before and after the local content regulation was enacted. How has it changed how you work with international companies?
As you rightly said, we started before the regulation came into effect because we started in 2002. The regulation came into effect in 2014. It has been and continues to be a struggle because a lot of the IOCs still do not think that local companies can provide services to the international standards that they’re used to. The shortage of highly skilled local technical manpower has not helped either.
This shortage of skilled technical local manpower is because, unfortunately, a lot of locals tend to study disciplines like business, administration, economics and law. The oil and gas industry is mostly engineering, and we have very few local engineers.
Those are some of the challenges we faced coupled with no regulation in place when we started. This is important because wherever in the world local content has worked, it is because of regulation and its implementation and enforcement. Obviously, the IOCs would rather work with companies they know or they’re used to from Aberdeen or Houston. These companies have multi-million dollar facilities, and they don’t want to risk awarding contracts to a company simply because it’s a local company.
I think one of the problems we face, which we mentioned at the recent roundtable, is that we have a lot of local companies that provide everything and nothing, they tend to be be called “multiservicios,” which in English means multiservices. We at Alduco differentiate ourselves from such local companies, that’s why our organisation is called Alduco Engineering Services, which speaks for itself: We provide technical services.
Now with the regulations that have come in, it’s good and we’re beginning to see more interest, because, to be honest, even though we have worked in the industry since 2002, we are not getting the volume of work we should be. Hopefully now with the regulation and the low price of oil, IOCs will pay more attention to us because hopefully they will realise that if they can get a company locally that can provide the services they need to the same international standards they expect, it makes economic sense because the local company is cheaper and you’re complying with the local regulations. Also the IOCs will be creating employment and giving back to the host country, where you’re making a lot of money.
A lot of the IOCs get a lot of negative publicity. Take the case of the Niger Delta in Nigeria for example. In a way, those communities can be understood, because they don’t seem to have anything yet the wealth is coming from their communities.

What has been your strategy to show these international companies that you can meet international standards? What are some ways that local companies can show that they do meet these requirements?
First of all, you have to have qualified people. You have to have structures and procedures in place in terms of job execution, safety and quality. You have to bring in experienced people. One aspect of the company is that when I started, I recruited locals and I brought in some expatriates who were very experienced. The locals I had were trainees when I started, but today they are no longer trainees. They are able to go out and do jobs by themselves.
Another way for local companies is to partner with international companies to build up their capacity and capabilities to be able to provide services. When I’m talking about partnerships, I’m not saying they should be commission agents. I’m talking about working together, and that’s what we have done in the past with international partners. We have engineers from our international partners and we have our local engineers. They’re both going out and executing projects.

Who are your international partners?
There’s a company out of the USA called Deepwater. We’ve worked with them on some asset life-extension solutions. For example, some platforms were initially designed with a lifespan of, for example 20 years, but due to new technology in exploration, some fields are still producing crude oil, past the expected duration of the fields. This means that many of the platforms’ lifespans need to be extended. We have solutions and technology to extend the life of a platform by another five, 10 or 15 years, and we’ve done these types of projects for ExxonMobil and AMPCO in Equatorial Guinea as well as for Perenco in Congo-Brazaville.

What kind of training programmes have you implemented to get local people qualified?
Basically, I took people who had a technical base, some who had gone to university and others who had not but had some technical qualifications and experience. Then I took some people who had worked in the industry as well. I brought in a highly skilled expatriate workforce to train our locals. We conducted some of our training in-house and others on the job. For example, if we have a technical job to do, we send out an engineer with a trainee engineer to work alongside our engineer, and that’s how we’ve been able to develop our people.

What should the government do to make sure that the population is trained to meet the industry’s needs?
I think a study should be conducted on the needs of the industry. The government should work with the IOCs, universities and the technical colleges, and also with the institute of technology. We believe there should be some sort of industry analysis to find out what the shortages or gaps are. More grants to go and study outside, especially in the technical disciplines necessary for the oil and gas industry, should be given.
We need to have local engineers with degrees specialised in mechanical, electrical, civil, chemical and process engineering. Those are the main disciplines in the industry.

Have you seen more interest from clients since the local content regulation was passed?
I’ve seen a change actually. For example, there’s quite a few companies I approached previously to try and enter joint ventures to increase the range of services. I started approaching companies before the regulation came into effect, and a lot of companies – since they were working here already – did not see the need to have a local partner. But now all of a sudden we have this regulation. A lot of companies I approached in the past that were not interested are all of a sudden interested in talking to us. We’re actually talking to five different companies.

How would you say the local content regulation could be improved as well?
It’s good to have regulations, but if they aren’t enforced then companies are just going to do what they want to do. But I think there’s a big effort on the part of the government to try and enforce and make sure the companies comply. Also the companies should, on their part, understand that when you operate in a country you have to comply with the law or regulations.

How would you say trust between international and local companies can be improved?
I think the IOCs are a bit unfair with the local companies, because in the first place they are reluctant to work with us simply because we are local. When they give us an opportunity and if something goes wrong, it’s easy for them to say, “You see, that’s the reason why we didn’t want to work with local companies.” But there are many examples of things going wrong with international service companies they’ve worked and work with. This doesn’t seem to be a problem or deterrent to the IOCs to giving work to international service companies.
I think we have to work together, from the local companies’ side, there are some services that can be handled by us, but we don’t get given the opportunities. We don’t get the opportunities for various reasons. According to the IOCs, they don’t think that we are ready, but if we are not ready we would not be working with them. I’m not talking about providing domestic staff, as that’s what some IOCs believe is all we are capable of. If I get a contract for one week from an IOC, it’s because they trust that I can do the job. So why are they giving me one-week contracts and then giving the three-month to three-year contracts to international service companies? That is where we have to work together, and there should be more trust between both parties.

Some local companies say they have trouble getting started because of the lack of funds available in the banking sector. Have you experienced any troubles in terms of getting financing and working with the local banking sector?
Definitely, because I think the banks here are not really set up nor do they have facilities for the oil and gas industry. Countries such as Nigeria have departments in the banks that focus on oil and gas. For example, a purchase order from Mobil in Nigeria is enough to go to the bank to get a bank loan. But here in EG, to get a loan they ask you for all kinds of things. They’ll ask you for a lot of guarantees people don’t have, such as property.
It’s a big challenge, but we are hoping to work with banks like Ecobank that have experience in the oil and gas industry in other countries in Africa. Also, with the government talking to the other banks, hopefully things can improve.

How does having an information and communications technology (ITC) company benefit you in the oil and gas industry?
One of the things that was touched on in the roundtable was diversification, especially when the economy is down. But actually, the first business I started was an ICT company called, The Computer Store. The reason I started with that was that I needed to have a business that would start generating revenue from day one.
Oil and gas is good, but it takes a while. Contracts can take up to a year to be awarded. In the meantime, you have to pay bills. With the shop, at least on the daily basis you sell cartridges and paper as well as offering IT services, so there’s income coming in. From that, I was able to leverage and invest the money from the ICT business in the oil and gas business.

What is your vision for Alduco Engineering Services in Equatorial Guinea and in the region for the next five years?
The vision is basically to be a company of reference in the Gulf of Guinea, providing services to the oil and gas industry and to international standards. We have started to realise our vision, having provided oil and gas services in Nigeria, Congo-Brazaville, the Republic of Benin and of course Equatorial Guinea, where it all started. We are looking to do work in Ghana as well as the industry develops.
We are very hopeful that in Equatorial Guinea the local content regulations will help us as well. We believe it will help us not because we’re a local company, but because we are a local company that is competent, has a track record and can deliver to international standards. We compete against international service companies here, and in some cases we have won. We want to continue down that line.

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