Survival is all about accepting the reality

 

 

 

Engr. Felix Amieye-Ofori V is Managing Director/CEO of Energia Limited, Operator of Energia/Oando JV Ebendo (ex-Obodugwa)/Obodeti Marginal Fields in OML-56, Kwale, and Delta State of Nigeria. He is a technocrat with years of experience in the oil and gas industry. In this interview with Global Business Drive, he spoke on the need to spread the Local Content across the board and take it as a national policy that would be domesticated and not indigenized. GLADYS JOHNSON Reports

  Q: Joint venture with Oando?

A: Oando and Energia bided separately and they were merged by the Federal government. The Government awarded 55% to Energia and 45% to Oando and made Energia the operator of the asset. They were jointly awarded the asset. However, our activity is to focus on the bigger goal and manage the project and in that light we have done very well so far.

 Q: What are the effects of the recession on the economy?

A: Everybody is impacted by the present recession. The Nigerian economy is an oil and gas economy. Even though the number of the oil GDP is very small, but it generates the revenue from the foreign exchange. The major issue is that some of our major pipelines were blown and we are not exporting much. That is what it actually caused besides corruption; Nigeria was not exporting so much crude oil. And then the crude oil price fell. All of a sudden it became a shock to the country. When 80% of your revenue comes from the crude oil, it’s challenging. And for those of us, who are producing, our production was curtailed because our major export line Farcados was down and it’s still down since February and it’s almost a year since we shut down. It came up just about few days in October and November and it went down again in 2016. I used to tell people that low crude oil price is not a stranger to oil business. The only problem with Nigeria was just that low crude oil price came when there was heavy vandalization. So we suffered low production, low export, and low crude oil price. Then since the foreign exchange is not there, of course Nigeria is purely an importing country, we only export majorly crude oil from major foreign exchange. So, that generally affected everything. If we are producing locally and we continue in terms of volume, it will probably roll out. But when you are not producing, and then the crude price dropped, the little you are producing doesn’t mean anything to you anymore because the volume is so small, price is so small, the revenue will be so small, but your needs doesn’t just fall. Before you cut severally, that’s when it just becomes stressful. But I think by the fourth quarter report, there is a growth even though it’s negative from 2.24 to 1.5. We have almost about zero point growth in the economy.

 Q: What is your take on the local content?

A: Local Content is almost in everything that we do. For me Nigerians have hype. It becomes a thought. It becomes something and all of sudden; gradually it wanes out because eventually it was not fully integrated to the corporate economy of the country. The country as Nigeria still look at local content more from the oil and gas industry than from the national economy.  I could be wrong but that is what I see. Nigeria as a country has not taken over the local content.  It’s the oil and gas industry that is struggling with it, not the country. But if it’s the country, we will see it because there is no way oil GDP will be 89%. The local content is not showing. How can you have 80% revenue and GDP is 89%? That is what that revenue is contributing to the GDP, 89%. So, where is the local content?  By now we should have the local content spreads, so it’s only left for the oil industry. After 60 years of oil industry, what have we domesticated in this country? There is no industry that has sprouted out of the oil and gas industry. How many Nigerians are busy? That is what GDP is all about. GDP is all about how many people are involved. How many sectors are involved? So by now the oil and gas industry would have spread. If it is a national policy, they would have to look at local content in the refinery and in the other segments of the industry.  We need to spread it and take it as a national policy that we need to domesticate and not indigenize. I am talking about domesticating this technology. Let the people spread out. When did the service providers like MTN, Etisalat, Glo, and Airtel come? They are contributing something to the economy, including Nollywood.  Why is it that the oil industry has about 8%? By now it should be 30%. Local content doesn’t have to be limited to the oil and gas alone. Local content is not even in the refinery, it’s only in the upstream. All the service industries are the ones struggling. Local content should be in petrochemical, refinery, gas plant and LPG. It should spread. The government should inherit it. Take it and make it part of their growth policy.

 Q: Modular refinery?

A: We are working seriously on our refinery. By the end of 2018 and 2019 first second quarter we should have one. Local content shouldn’t be left alone for the upstream, service industry people, the fabricators and for a few select companies. It should be a national thing. It should be the oil and gas thing. So that it will have a bigger package.

Even the funds earmarked for local content is only available for those in the upstream service industry. Local content should get more local presence because oil and gas is huge. If you take gas you can turn it to anything.

 Q: How are we going to cope with the recession?

A: For me I think recession is a natural thing.  People are making it look like something from the moon but I think differently. God created every human being to adapt to ugly situations and survive. The only way of survival is first of all accepting the reality. Don’t live a false life. Sit down with your team and discuss issues. Think of your strategy for survival. It means that I need to look for a cheaper way of making revenue. I need to think of the people that have the things that I don’t have so that we can share and reduce our investment cost and get more profit.  Survival is looking at what I have been doing that does not add value to me. It’s about cutting off the excesses. That’s why I’m not into so many things because life is about accepting the reality. Energia can produce seven thousand barrels of oil per day and we have that production capacity. But right now we can only produce two thousand because Farcados is been down. So you tell me that as I’m producing two thousand, I should run a budget of seven thousand, that’s foolishness. “Survival is accepting the reality”, Understanding those in the environment, then appreciate the people in the environment. That is why people form unions. Just like when Aids virus came, a few of them came together to support each other. No one survives alone because you are not the only driver of the economy. For those of us in the oil industry to survive, we need to get the service company to our site and get them to do the job within our budget because if I don’t have the money, they will not have the job to do. If you want to keep your job, we must collaborate.  So, once we accept the reality, you know the community and the players, so that you can quickly align to reduce. You don’t need to go to Harvard or Petroleum economic schools to survive. It’s only natural. You have to come together to survive. That’s the problem with Nigeria. We’ve never come together as a country. We are either north or south, Yoruba, Igbo, Ijaw or Hausa. If you think of a Nigerian, I don’t think we have many Nigerians in this country.  What we have is Igbos, Hausas, Yorubas, Igala, south south, Just take a trumpet and ask all Nigerians to come out, you will see how many people will come out. To survive, you need community. Shell, Chevron, Total cannot survive individually. So how can a small Nigerian company survive? You have to integrate and pull resources and share resources. When you apply for loan in the bank, if you like, put your interest rate at thirty percent, you are wasting your time; you will not get the loan. We must agree and there must be a mutual connection. It is not happening in Nigeria because we are not one people. That’s why we are not surviving. You must accept the fact that things are what they are. Nigeria is the way it is because we are denying so many things. The moment we accept the reality, we find solution. Energia is surviving because we accepted that all we have is two thousand barrel. We are now collaborating with a company to do trucking. We are trying to see if we can export through Sapele port. I tell people that the day Nigerians agree to stop corruption, we will stop it.  How many Nigerians know our potential? Do you know that Nigeria is not competing with anybody? There is no country we are competing with. Even the states are not competing at all. Nigerians don’t know our environment. Nigeria is not in the place where it belongs. How did countries like Japan, China, Trinidad and Tobago get where they are today? Must we continue to import substandard materials from China? The moment we realize, we will move forward in life.

 Q: In the next five years where do you think Energia will be?

A: God is the owner of five years. Energia should be an integrated company. We should have our own refinery with our partners running. Our gas plant should be running. Our production should be in the neighborhood of about stabilizing almost at fifteen thousand barrels. Another five years we should have another bloc hopefully. It should be integrated oil and Gas Company.