The Chief Executive Officer of Oilserv Limited, a leading EPC company in Nigeria, Emeka Okwuoza, in this interview with select journalists at the recently concluded Intra-African Trade Fair 2023 in Cairo, Egypt gave kudos to the organisers of the fair, Afreximbank, charging the continental bank to scale up its initiatives to promote intra-African trade. Excerpts:
You are a participant in the $25 billion Nigeria-Morocco gas pipeline project. Why do you intend to participate in this big project and at what stage are negotiations?
oilserv Limited, which is a group of companies, is one of our major companies known as Oilserv, which is an Engineering, Procurement, and Construction, EPC, company in pipeline facilities. We have been in business since 1995 and we have built our capacity as the largest Nigerian EPC company in pipeline facilities whether gas or oil. We have built a lot of pipelines. Currently, we have a portfolio of more than a billion dollars of pipeline EPC works. Prominent there is the AKK pipeline, which is the Ajaokuta, Kaduna, and Kano pipeline. Against the backdrop of this, we believe that we are the most qualified company in Nigeria, possibly Africa, to participate as an African company in the Nigeria-Morocco pipeline.
I know that the project is still in the initial phase, feasibility is what I believe is going on at the moment. At the end of the feasibility, a full scope of the project will be put together and there will be tendering for the EPC works. From what I hear, that will happen sometime next year. We are not in control of the process, we know about it by asking for information from the promoters. We believe strongly that we are in this position because our participation will help drive Africa’s development, not just in terms of infrastructure development but capacity building within Africa.
Where are we on AKK?
AKK has gone far enough for us to say that before next year, AKK will be completed. Like any project of its size, it is a 40- inches, 614 kilometres pipeline. We are constructing 303, which is about half of that, and it is not just about construction, we did the engineering design. We procured all the materials and we are constructing. A project of that magnitude comes with challenges, but we are structured to deal with the challenges. Sometimes people ask why it hasn’t been finished, building a pipeline through every inch of a territory isn’t as simple as putting it on paper. At the last count, we have more than 1500 people working on that project. You can imagine its scale, the kind of security that has to be put in place, and the logistics system we have to put in place. The project is moving and we are strongly working with the owner of the project, the Nigerian National Petroleum Corporation, NNPC, to deliver the project.
What is the percentage of completion?
I can tell you the percentage, but it won’t do justice to the work done. Because when you look at the scope of a project, it includes documentation, it includes all kinds of things that are not physical work but happens at the end of the project. If you look at pipeline welding, we are close to 80 per cent, but for the overall project, we are about 60 per cent. The remaining 40 per cent isn’t physical work to be done because it involves documentation and that is what makes up EPC.
Can you let us know some of the challenges? Are these challenges in any way delaying the work’s delivery?
I won’t say delaying, but it impacts the schedule or the timeline that we are looking at. The challenges are mostly around logistics. You can imagine very clearly when you talk of 640 kilometres of pipeline, the line pipes used, come in a 12 metres section. That is the only way you can carry them in a truck. You can only carry two or three, a maximum of three in one truck. Do your calculations and you will see how many thousand trucks would have to do that on the road. Logistics is an issue and we are dealing with it already. Security is a major concern. You know the peculiarities of the region, but we have strong support from the Nigerian security agencies. We are able to continue working but it creates delays because you have to only restrict yourself to working at a certain time. Funding has been touted as a problem. Yes, it could have been a problem but NNPC has been able to tackle funding and as I speak to you, funding isn’t an issue because NNPC is being able to fund the project despite the fact that the portion of the project that was supposed to come from China didn’t eventually come, but NNPC is funding it.
As a result of the war in Ukraine, European Unions, EUs, have increased their gas orders in Africa. Looking at the population in Africa, do you think it can solve Europe’s energy conundrum?
The easy answer is to say yes, but Africa has loads of resources and what is important is the development of the resources in a cost-effective manner. If these resources are developed, it is enough to take care of African needs and Europe. Actually, the positive side of taking care of European needs is that it enables finance to come in for more development of the resources. Another important thing is that African countries will need to focus on internal development. Nobody will do it for Africa, it has to itself. If we have a proper interconnection of our resources, logistics, and human capital movement, I can tell you that Africa will be unbeatable because our resources are enormous and the resources have not really been touched much. So, we live in a global world and there will be trade. We give some to Europe and we take some from Europe and other parts of the world. Europe presents a good opportunity for energy development of African resources and I believe that it is enough to go round.
Why are you at the Intra-African Trade Fair?
I am here for a few reasons. One is to be able to join the African Export-Import Bank, AFREXIM, bank initiative. Some are based on the availability of finance which we need very strongly to be able to execute this project. Another is to key into the intra-African system and be able to work closely with other African countries from the point of view of opportunities for Oilserv. Also, we can execute projects in other parts of Africa. Additionally, to work with other companies that do similar activities or can positively add to what we are doing. For example, if I can buy trucks from Egypt, why should I go outside Africa to buy them? If Egypt can see what I am doing and say, ‘Oh, we can need your services to build pipelines here’, that makes for a better intra-African trade. It falls in line with the African Continental Free Trade Agreement, AfCfTA, protocols which are about the development of Africa. For me, being in Egypt is positive and I believe that we need to do more of this in Africa.
To the first part of your question. You know Egypt has developed its oil and gas in the past 20 to 30 years very quickly. Today, Egypt has a lot of skills in oil and gas, particularly gas because gas is the key to driving the energy industry. As a company that has been operating for a long time, we can also work with the Egyptians to put our services out here to be able to deliver our services here (Egypt) when we have the opportunity. In the same way, we will be in a position to see what we can take away from Egypt from the experience and knowledge, which we can apply in Nigeria. For the AFREXIM trade fair, it is very good. AFREXIM bank has made a huge difference in Africa in terms of being able to help create capacity by providing finance, interlinking different countries, and looking for ways to build capacity in infrastructure and human capital that ordinarily would be difficult to achieve by going to a finance system outside Africa. The issue of trade fairs is very important. Compared to previous ones, I can see that this year’s is better. We expect every trade fair to be better than the last. I think we need to encourage AFREXIM bank by participating and contributing to what they do in order to make it easier for all African countries to key in. I believe strongly that this fair is important because it creates awareness and it creates opportunities. You can see deals being signed. These deals are coming on the back of engagements that are going on, and more will be signed in the future. I believe it is positive.
How well have you keyed into the Afreximbank initiatives?
We have had quite some contacts. Some of them are at the initial stage of discussions to look for opportunities that will present themselves for cooperation or that will enable us to place our services and to also use the services of Egyptians. There are quite a few of them. Two days ago, some of them were with us at the panel session and we believe strongly that as we progress on those discussions, one or two can yield some fruits, but we are positive in engaging Egyptian companies going forward.
What are the challenges involved in developing gas in Africa?
The challenges are peculiar to the gas industry. Gas is about infrastructure. Infrastructure is about finance. For you to produce gas, process gas, transport and utilise, each of the chains has a lot of costs. It is not like oil that you can produce and store in a container or storage and use as you wish. Before you start to drill, you must have a full site for utilisation otherwise, you cannot start, because if you don’t utilise the gas once it is produced, it means you will flare it, you cannot store it, you will lose money and it means you are damaging the environment. The key challenge is finance, it is everything in gas development. There is also the issue of developing the value chain properly so that you can tie production to utilisation. If you don’t tie it, it is difficult to justify the investment.
How do you look at energy transition, particularly transiting from fossil fuels to gas?
It depends on who is saying energy transition. Oftentimes, you hear fossil fuels to renewable, which is very good. Eventually, we will get there, but what Africa needs is how to move from burning coal, cutting down trees, and heavy oil to gas, which is cleaner. That is the real transition. We have to understand that if we don’t transition to gas, it becomes a question of saying sorry go to renewables, we don’t have the capacity to develop renewable to the level that we need. What it means is that people in the villages are being asked to cut the trees and destroy the environment.
Have you any call to action to stakeholders or the government?
I will look at it in three ways – one is to AFREXIM bank. It is to thank them and continue to ask them to do more. They have made a lot of differences in Africa, but there is still more to be done. You can see the promotion of EPC contractors. The scheme they have makes a lot of difference. In the future, we would like to see African companies and contractors executing contracts in Africa. Take for instance when you drive around Cairo, you will see massive development going on. I am aware that most of these EPC activities are done by Egyptian companies. For example, we also have Nigerian companies that can do the same, but where we don’t have the full capacity we can work with the Egyptians to bring their capacity to Nigeria and vice versa. In the oil and gas industry, Nigeria is far more developed than any country in Africa in terms of knowledge, skill, and capacity; we can also bring this out and make it work for African countries. So, I implore AFREXIM to do their best to keep doing this inter-connectivity. For the government, it is good that they listen and they have part of the encouragement. You can see that at this fair, a few governors of states in Nigeria came in, I will tell you that it is very positive because that way, they will engage more, they will see the opportunities and they will also see if these opportunities could be applied in their states and see how to help build capacity.
Finally, I implore businesses to know that at the end of it all, the bottom line is the development of businesses because businesses build capacity and capacity to develop a country whether it is in infrastructure or human capital. We need to work with government and funding partners as it is how we can all work together to move Africa.