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Volatile business terrain pushing up opex in oil, gas sector—Oilserv boss

The Managing Director and Chief Executive Officer of Oilserv Limited, an indigenous Engineering Procurement and Construction (EPC) company, Mr. Emeka Okwuosa, has given fresh insights on why upon being the Africa’s largest crude oil exporter, the cost of investing in the sector has remained one of the highest

In an interview, he observed that the volatile business terrain in the oil producing region, makes it an hostile and risky when operational expenses (OPEX) is reviewed. He observed that the scenario further emboldens industry financiers to mark up interest rates in order to accommodate unforeseen circumstances apparent in the region.

However, Okwuosa argued that his company has out-grown cases of financial crisis based on reputation it has garnered over the years handling strategic jobs in the industry.

He said “Oilserv being an EPC company of repute has given us advantage because we don’t need to prove ourselves; the financiers know we can deliver. We have the capacity to deliver.

On the recently approved contract to provide gas infrastructure from Abuja to Kano via Kaduna, he said “We have three financiers eager to give us fund but the biggest challenge in this kind of project is the ability of the Federal Government to provide a guarantee for the fund. We have confidence based on our discussion with NNPC, who is our client, that this arrangement will work. NNPC has a system in place with the support of the Federal Government to make sure that it works.

“We are satisfied with the security they are providing and our banks are also satisfied with that. So the issue of funding is not a problem in anyway. The way it works is that, when the money is ready, it is domiciled in the Joint Venture (JV) account with NNPC. Now comes the EPC, as you work, you are paid from that fund.

Giving more insight on how Oilserv rose to limelight, Okwuosa revealed “When we started in 1995, it was a very small company. It was only me and one other employee and we slowly built it up”.

“Now, we built it up by re-investing whatever money we made and acquiring latest technology. It’s not just about technology acquisition but by knowing the principles of these technologies.

Continuing, he recalled that “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 EPC work we have. We later introduced the welding works.

He said due to the challenges coming with manual welders, “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 but because it is not manual welding but automatic, we are not bound by certain rules of the welders’ 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 speed up.  The other technology is our Horizontal Directional Drilling (HDD) technology system. You will realise 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 additional problem down the road, which can be erosion of the water bed.

“To avoid creating this environmental problem, 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 olden days, we had 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.

All these gave us advantage over others. We train students and graduates and we invest in human resources. In all, we were able to win the AKK project because it was through a bidding process and we came out best.

We are the only company in Nigeria today that can deliver such project, the rest can’t. We are the first indigenous firm to graduate from being a construction firm to a full EPC company.  To be a full EPC company is expensive. It requires investment, it requires dedication. If you look at the AKK project, you will realise 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.

Oando’s role in the project,” Okwuosa, the founder and chief executive officer of Oilserv Group averred.

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