The Managing Director of Lagos Deep Offshore Logistics Base (LADOL) Dr Amy Jadesimi was one of the few chief executive officers honoured as lead speaker during one of the panel sessions organised by the Petroleum Technology Association of Nigeria (PETAN) at the 2016 edition of the Offshore Technology Conference (OTC) in Houston, Texas (USA) in recognition of the company’s investment of $500 million building the only 100 per cent Nigerian private industrial free zone in West Africa.
Reports indicate that by cutting offshore logistics (drilling and production support) costs by a massive 50% and enabling the building of the world’s largest Floating Production Storage and Offloading Platform (FPSO) in LADOL Free Zone, located in Apapa Port, LADOL is boosting the economy with 5,000 direct jobs and no fewer than 50,000 indirect jobs.
In this interview by the Publisher/Editor-in-Chief Nigerian NewsDirect with the CEO of LADOL, the largest private Nigerian offshore logistic facility, Dr Amy Jadesimi expressed her optimism for the future of the industry and her concerns about the current hurdles that must be overcome to reach that future, including the long contracting cycle, the foreign-controlled private monopoly strangling the industry and the need for greater collaboration among Nigerians, in the public and private sectors to create the hundreds of thousands of jobs that could be generated.
Further, she highly commended the administration of President Muhammadu Buhari for assuring investors that an end had come to corruption and the private foreign controlled monopoly in oil and gas logistics services that had stifled investment for so many decades.
It will be recalled that President Buhari has endorsed LADOL for taking a lead role in the implementation of Real Nigerian Content and for making strategic investments in critical infrastructure that has not only created thousands of jobs but also built a haven for IOCs and their service providers in West Africa.
The Total Egina project which includes building the (FPSO) platform valued at $3.8billion, is said to be first of its kind to be built in the sub-Saharan Africa and marks Total’s investment and faith in LADOL shows Total’s foresight and commitment to improving the oil and gas landscape in West Africa. Excerpts.
What is your opinion on the participation of National Assem-bly members at the Nigerian Content panel session of PETAN during OTC?
The discussion during the Nigerian Content panel session of PETAN during OTC was very frank and open, we discussed the hurdles facing the industry and the huge opportunities that will be realized once these hurdles are overcome – which we know is only a matter of time.
Indigenous private sector companies some of whom are now heavily invested in the industry and the government has a lot of work to do together. The brainstorming session was the start of this work and it showed the readiness on all sides for all stakeholders to work closely together. Going forward, the industry requires the huge private investment, at least USD 20 billion per year of private money just to maintain the status quo and an additional USD15 to 20 billion to grow the market. This means Nigeria has to become more competitive, we have to become the hub and premier investment destination for the oil and gas sector in West Africa.
Altogether the industry is targeting production levels of 3 million barrels of oil and 10 million scf of gas per day. Fortunately, the fundamentals of the Nigeria petroleum sector are very strong, with many acreages being self-funding, when in production with strong operational and cost controls in place. With this huge market potential and strong fundamentals Nigeria should naturally be the most attractive oil and gas investment destination in the world.
In addition governance and macroeconomic factors are also in Nigeria’s favour, from an investment perspective – our current government and the low oil price have created a perfect window of opportunity at precisely the right moment in the life of our industry.
Therefore, the time has now come for public and private stakeholders to come together and quickly overcome the issues that might derail our otherwise bright future. This issues are well known and easily identifiable – which means that if we want to fix them we can do so immediately. Such issues include the long tender cycle; we commend the GMD for announcing a reduction in the tender cycle to six months. However, six months is still far too long in comparison to our neighbouring countries and to reassure investors that six months is achievable we would like to see concrete and detailed plans on how six months, or even less, can be achieved.
Cost reduction is another vital area that must be addressed, maintained an expensive foreign controlled monopoly in the provision of oil and gas logistics will literally kill our chances of growing the market and attracting new investors. In 2007 when the oil price first began to rise NNPC and NAPIMS insisted that all logistics had to be done from Onne at prices that were the most expensive in the world, as a direct result of this Nigeria lost billions in investment to neighbouring countries and exploration ground to a halt.
Now, in this new era of real local content and with the absolute need to attract tens of billions in private investment we are urging ALL stakeholders to come together and look to collaborate to grow the market – which will naturally create more work and good returns for all participants, both old and new.
What is the role of LADOL in this investment drive?
LADOL is playing a prominent role in the entire value chain but particularly in the areas of cost reduction and job creation. Operators that carry out their services at LADOL have halved their offshore drilling and production costs, sending a message to global market that Nigeria is an attractive location from which to support your offshore blocks. Cutting costs also makes investment decisions for future exploration and production easier and quicker. For Nigerians wanting to participate in the sector for the first time, our low cost solutions make their business plans viable and our word class facilities make it possible for them to compete on a global scale.
We also expect that our example will encourage investment in other new facilities, to achieve our market ambitions we need several more facilities and service providers, we need to create clusters all over the country. Our ship building yard was built in just under one year, so any new investors can use that as a benchmark showing how easy it is to build in Nigeria.
LADOL is still developing and building but our future success depends on other investors and facilities also coming up – so that we have the capacity across the nation to make Nigeria West Africa’s hub.
What are specific policies and enabling laws needed to encourage further investment?
We were lucky that senior members of the National Assembly participated in the conference sessions organised by PETAN. The honourable and distinguished members made it clear that they were 100% ready to support the changes needed to enable this investment. We have some good laws already in the books which also need to be fully enforced, such as the Local Content Act, which we were pleased to learn is even now being strengthened through an amendment by our lawmakers.
We all have to ensure that we support REAL local content, that is investment by Nigerians in building facilities, providing services that add value. Real local content is easy to spot because it lowers costs and creates jobs, the idea that local content adds costs is false and that perception was only created due to rent seeking, monopolistic and agency contracting models that distorted our industry and short changed Nigerians. What is important now is that we make the most we can out of this short window of opportunity we are currently in and focus on making the changes in behaviour and tendering practices that will yield immediate positive results. Also, we cannot allow foreign companies to dominate the local market under the guise of providing services through indigenous companies who are in reality just commission agents. We need the full support of our government as our regulator and law maker to help give us and maintain a level playing field and the strict rule of law, as this will provide fertile ground on which private sector investments can grow.
Nigeria’s future has never been brighter, so let’s hold hands, sit down and get down to work.