Original number of personnel for 4 projects:200
Steady and streamlinedJuly 20, 2016
Akin Odumakinde, CEO DeltaTek Group, talks to TOGY about the company’s role in Equatorial Guinea and his predictions for the future of exports and international trade in the market. DeltaTek Energy is a member of the DeltaTek Group. Incorporated in 2012, they commenced full operations in July 2013 providing EPC services. The company has been present in Equatorial Guinea for five years and has plans to expand into sub-Saharan markets as well.
What are the latest developments for DeltaTek in the current oil price environment?
We are doing things outside of the status quo. It is a big paradigm shift. We have to worry about issues that we have not worried about for 20 years, because this year projects that were primarily approved in the budget have been put on hold. This resulted in the loss of about 65 employees who had been gainfully employed by the organisation. The current position of the industry is a challenging one, as we are faced with difficult situations and decisions to keep our business going. This is not only impacting us, but also our clients. The IOCs are majorly affected.
I left for Christmas very happy because we had four projects that would keep us through these difficult times, only to come back and find these projects could not meet the base budget. These four projects would have engaged about 200 of our personnel, but three of them were suspended because of lack of funding. This is a major risk that we had no reason to pay attention to in the past 20 years but has now become an issue: There are projects but no money in the budget to execute them.
Right now, we are re-strategising on the possible ways to sustain our business, hence my travelling to China to discuss business opportunities. The Chinese government has trillions of dollars and they want to invest, so taking advantage of this is one of the best business options.
Local content is a major fragment of Equatorial Guinea’s future. DeltaTek Energy has to continually build capacity and capability to remain competitive in the industry. We have to keep ourselves employed at all times. Not everything has to go to China, so we have to strike a balance by encouraging Equatoguineans that capacity can be built in Equatorial Guinea.
Do you think the oil market will be more volatile or steady in the coming years?
I think it’s going to be steady. It may never exceed USD 60 per barrel and just hover around USD 50. This means that everyone has to re-think their way of doing business, reduce their costs and come up with different strategies on how to execute projects. Our clients are doing the same now, so service providers need to look for other ways.
We are in a recovery period, and everybody has to adapt. We should not expect a return on investment as projected before. If you were thinking of recovering your investment in five years before, you have to project 10 years now, and then streamline your costs to make it amenable to your client. That’s where the USD 50 price for crude oil will be good. The end users also get to see a good benefit from lower prices. In the USA, everyone is happy at the petrol pump price. It’s a win-win for the producer and the consumers. It would be nice to see USD 70, but I don’t expect to see USD 100. I think that era is over.