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Okwuosa: How we’ll raise $2.8bn for Ajaokuta-Kaduna-Kano pipeline

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Okwuosa: How we’ll raise $2.8bn for Ajaokuta-Kaduna-Kano pipeline

Chief Executive Officer, Oilserv Limited and pioneer member, Petroleum Technology Association of Nigeria (PETAN), Engr. Emeka Okwuosa, speaks on life-threatening challenges confronting indigenous oil firms in Nigeria, including impediments to critical investments in energy sphere in this interview with Adeola Yusuf. Excerpts

 

 

Have the Nigerian companies adopted the use of technology/robotics for oil, gas operations?

We are already incorporating technology in our operations. Many years ago, you could not find any Nigerian company doing horizontal directional drilling. You would have had to go abroad for people to come and do it. We have deployed that. We have been able to cross rivers with 48-inch pipeline, which would mean drilling and opening the line to 64-inch, which is a major challenge because it collapses a lot. We are encouraging technology a lot.

 

For robotics, anything is possible but what we should be asking ourselves is how do we put that side by side with the Nigerian initiative and benefits. If you take robotics totally the way you have seen it by displaying human capital, what happens to our economy? I won’t say it is not in our own interest to deploy that, and I won’t say you can stop that. You can’t stop a moving train, you would have to realise that over time, that may become the norm but what do you do? You start to train people to develop such, you start to train people because somebody has to manage that. You will create a different skill to be able to drive that but you cannot completely take out the human interface.

 

What are the significances of the AKK project?

AKK is Ajaokuta-Kaduna-Kano pipeline, which is a 614km-long natural gas pipeline project. AKK is a very unique project, not just what it would achieve, which is to be able to move gas to the northern part of Nigeria and create availability of energy to drive industries and create job opportunities.
North does not have energy, but if unemployment continues and security problem continues, everybody will suffer without gas in that axis.

Secondly, AKK is significant because it is the first time a project of that magnitude is being done as EPC (Engineering, Procurement and Construction) and Finance. It is not like the previous projects where NNPC and other International Oil Company (IOCs) award you a project and pay for it and you go ahead and execute and collect your money. We are providing the money and to provide such amount of money, the total value of that project, including two lots, is about $2.8 billion. This is not the kind of money you raise in Nigeria, you have to go and raise that capital offshore. And for you to raise it, you need security. That security instrument is a process and part of it requires the Federal Government to guarantee it.

For instance, if you are backing up the financing with the tariff you will charge from that pipeline, don’t forget that most of that tariff, for example, will be in naira. A financier who is overseas doesn’t know what you are talking about in naira. So you have to provide an instrument of convertibility that has to come from the Central Bank of Nigeria (CBN) guarantying that every collection in naira will be immediately converted to dollars. That’s a typical instrument and these things take time to get through government agencies.

 

So, we are going through that process and we are almost there. We have almost finalized the security and we have also started with the preliminary works. As we speak, the AKK project has started, that is the point I’m making.

 

What are the impacts of insecurity on AKK project?

We are Nigerians, if there is kidnapping, we will deal with it. You are not going to stop developing Nigeria because there is kidnapping. In construction, we are tested and we are knowledgeable. We worked 100 per cent between 2002 to 2007 when kidnapping was the norm in the Niger Delta. Oilserv remained there. We worked in the swamps, maintained all the pipelines, so there are ways to do that. We are Nigerians, we work in Nigeria and we must create capacity in Nigeria. That is not going to be an impediment at all. It is a concern, but we have procedures to deal with that.

 

 

How are the indigenous companies faring in deep-water operations?

 

 

We are already operating in that terrain in reality. When you say deep-water operation, you look at it from two different points of views. Are you looking at Exploration and Production (E&P), which is ownership or are you looking at services. I will talk from a service point of view. Nigerian companies participated in the service aspect for Bonga, Akpo, Usan. All these deep-water projects had Nigerians service providers’ input.

 

There are two key issues with participation in deep-water arena. It is about technology and capital. Both will take time normally to scale up. Nigerians are participating but we are only scathing the surface for now. There is still more opportunity for participation.
Now, how do we increase that? We need to assemble capacity and integrate that capacity by working together in order to have synergy and be able to deal with bigger scope projects. But we are in the integration of FPSO (Floating, Production, Storage and Offloading, which is the configuration of topside modules.

Nigerians are in drilling, pipelines and flow-risers. We are doing a lot but it is very    competitive and capital intensive and we have to slowly build it up as soon as we can because we have proven capacity but we need to do more because there is so much out there.
It is instructive to add that we have been adding value but not at the level we desire. So the way we can achieve this is by collaborating and synergizing between structured entities such as PETAN. By collaborating, PETAN members will be able to handle bigger projects and compete favorably with international service providers.

The lack of collaboration among service providers is a Nigerian factor. Everyone wants to do things in his own way and it is not the best way to go.

 

 

What is the update on Obiafu-Obrikom -Oben (OB3) project?

Let’s put Obiafu-Obrikom -Oben (OB3) in proper perspective. No pipeline has been built in Nigeria of that size or capacity. You may recollect that in the 1970s, 80s, and 90s, we had the likes of Wilbros and others but no Nigerian player was present in the pipeline industry. Look at all our pipeline infrastructure today, nowhere has 48-inch pipeline been built. It is not about the gas pipeline alone, we have the Gas Treatment Plant (GTP) at Oben, which is part of our scope. This is a GTP that is handling two billion standard cubic feet of gas per day (2bscf/d). This has never existed anywhere in Africa. When we talk about OB3, it is not just about building a pipeline.

 

Don’t forget that, there are two lots for our own section. We are building LOT B that will take the gas from mid-point all the way to Oben plant plus the Oben plant itself. Now, our pipeline was finished three years ago, but the treatment plant took a longer time because the location was changed from Oben North to the GTP location and it took us two years to go through the re-engineering process including getting the necessary approval.

 

But the story is clear, the pipeline and the GTP are going through pre-commissioning now for our own section. By September, our own lot would have been completed. That much I can only speak for Oilserv.

 

 

Would LOT B operate in isolation?

 

To some extent, no. But it depends on how the owner of the pipeline wants to use it. One thing you have to understand about the technicality is that we have a pipeline going to GTP Oben but we have another 36-inch line we built from Oben GTP to ELPS, which is Oben North that is a by-directional pipeline. This means you can take gas from the GTP in Oben into ELPS or take from ELPS into GTP. So the answer is ‘Yes’ and ‘No”.

Again, you can take gas from ELPS into Oben and Ajaokuta when we commission it. But the other section cannot be completed except Lot A finishes – to be able to evacuate gas all the way from Obiafor into Oben.

 

 

What gives your company an edge among your peers in terms of pipeline technology for the AKK project? Why Oilserv?

Oilserv is not about singing our praises. It is about the fact. Oilserv was set up on a sound basis and principle. That’s the basis of a sound knowledge of engineering and a clear plan to grow technology and grow the company organically. When we started in 1995, it was a very small company. It was only myself and one other employee and we are slowly building it up. Now, we built it up by re-investing whatever money we made and acquiring the latest technology. It’s not just about technology acquisition but also by knowing the principles of these technologies.
By my background, I am a cerebral engineer and I worked in 12 different countries before I came back to Nigeria. I was principally focused on developing engineering capacity.

 

Along the line, we moved on to look at the best way of achieving the engineering, procurement, and construction, EPC, work we have. We later introduced the welding works. Welding is at the core of pipeline construction and the major threat in welding is the fact that using traditional welding system. which is the manual welding system will involve welders association.

 

Some of them are not there to work but to create problems and you can’t control the quality of output too. We moved on to develop automatic and semi-automatic welding system where it is more like being in a production line in a factory. We trained our own staff and they became the welders. Because it is not manual welding but automatic, we are not bound by certain rules of the welder association.

 

With this, we are able to do as much as 25 joints a day. Manual welding can’t do more than six joints a day. That’s how we sped up. The other technology is our Horizontal Directional Drilling (HDD) technology system. You may realize that in building pipelines, you cross rivers, creeks and all kinds of barriers. If it is water, you will dredge it, drop the pipeline and cover it up. But by doing that, you disturb the water system, damage the environment and you may muddle the water. If you don’t restate it very well, you create an additional problem down the road, which can be the erosion of the water bed.

 

We developed a system where we can drill from one bank to the other without touching the bed of the river. In crossing roads, in the old day, we have to cut the road and imagine cutting an eight-lane road. Today, we do cross-boring system by going from one end to the other without disturbing vehicular movement on the road.

 

These gave us an advantage over others. We train students and graduates and we invest in human resources. We won the AKK because it was through a bidding process and we came out best. We are the only company in Nigeria today that can deliver such a project, the rest can’t. We are the first indigenous firm to graduate from being a construction firm to full EPC company.

 

To be a full EPC company is expensive. It requires investment and dedication. If you look at AKK, you will realize that we got the first section, which is the most important. If you don’t get the first section right, you don’t have a pipeline.

 

 

The AKK project is Oilserv/Oando consortium, what’s the role of Oando in the project because it is not an engineering firm?

 

You have to fully understand that this project is not just an EPC project but it’s a contractor-financed project. You go into a consortium for a particular reason. Oando is a partner to Oilserv, while Oilserv is the principal EPC Company.

 

I am talking from the view of EPC, Oando does not build pipelines. We are in a consortium because it’s contractor-financed and it gives us more leverage. Oando has always had concessions from the Nigerian National Petroleum Corporation, (NNPC), to develop, for example, the gas pipeline system in Lagos, through their company called Gaslink. We also like to support smaller projects, which would in time grow into bigger, more reputable and more sustainable entities.

 

 

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