In this Interview with the Publisher, Nigerian NewsDirect, the Executive Director of Poseidon Energy Services Nigeria Limited, Mr. Nwaigwe Alex Iheanacho speaks on the effects of the Nigerian Content Act on Indigenous Pipeline Companies, the root cause why International oil companies complain on the technical know-how of indigenous companies, and the challenges of cost of services as it affects the oil and gas industry. Excerpts:
What are the services you render relating to the Pipelines operations?
We do repairs, cleanings, Nitrogen enacting; we do pressure testing, pigging and we also do de-oiling of lines. In terms of de-oiling, if you want to cut the line without contaminating the environment, we remove the oil from the system and clean it up to make it available for cutting.
Since when did you commence operations?
We have been on operations since 2006.
Comparing the period of four years before the Nogic Act was signed and now, how do you see the roles and patronage of Indigenous Companies in the industry?
If I must be frank with you, the incident of the Nigerian Content Act has been very helpful because you only need to show the proof that you have these equipment and you can use them to get yourself working. The officers of the Nigerian Content and Development Board are also very helpful and they give listening ears anytime we meet with them. We have registered with them, and they have done a lot of trainings. At some point we did transactions through Petroleum Technology Development Association (PETAN).This is, because we are a member of PETAN . So, in essence the Nigerian Content Act is a boost to local companies.
Talking about capacities and technical know-how, Companies like Shell, Chevron, and the likes still complain a lot on the technical know-how of the Indigenous companies. What are your comments on this?
Frankly speaking, the reason they complain is that the international oil companies have a system of giving out jobs to the lowest bidder and they feel that once you are technically qualified, any amount you give out to them shows you can do it. They however forget that some people bid ridiculously low just to have a bit of the work to do, and by the time they get this job, they are faced with operations issues. They become short of finance to the point that they would not be able to pay their suppliers. They will not be able to deliver the services required for the job and in other to meet up, they would resort to looking for short corners and cheap labours among other unfair conducts. So, if the international oil companies complains about the technical know-how of the indigenous oil Companies, it is because they allow Nigerian indigenous companies to shoot themselves in their legs. It is expected that if one wants to give out a job, you need to carry out your personal evaluations and see if you can accept the price offered for the job. Part of the challenge we have in the oil and gas industry is the cost of services. Basically the cost of services goes down year by year but the inflations goes up.
What do you think is responsible for Inflation moving upward every year while the cost of services is on a decline?
This is largely because people are desperate to get the job. For example, if about four years ago, you provided a service for 400 dollars, and after four years you want to bid for that job again, if you bid for it at the same 400 dollars you will not get it. Surprisingly, people will want to bid the job for 180 dollars or 120 dollars, this is where the problems comes in.
Can we liken that to Competition?
Yes, we can refer to that as excessive competitions.
What effect do you think that will have on the qualities of job in the Oil and Gas Companies?
The effect is that sometimes the international oil and gas companies use this against the indigenous companies. They will make sure you fail and they will withdraw the job and give it to whoever they wish to give it to at a very high price. So,then, sometimes, they help because I learnt that there was a time in Shell that the contractor bided so low, and Shell had to give an average rate that every contractor should work on. That was how they were able to survive it. It’s really a big issue to the operators.
Can this be linked to the quest of the NNPC to cut down the cost of oil production per Barrel?
The cost of production per barrel has nothing to do with cost of services, because if a professional has to pay his workers, hire equipment, and pay for those equipment, and also do his insurances and pay taxes, when he puts all these together and finds out that it would not enable him to win the bid at a very profitable rate, he will under-quote and then start looking for ways to manage; either by short paying tax or he will have to owe some contractors that provided services. Some of them as a result, do not even pay workers while the welfare of some of their workers is an eyesore.
So what is the niche of Poisedon to make a difference in this case?
With Poiseid65t55tt555t555tttton, we suffer a lot in this area because we don’t bid cheap and we lose a lot of works to this; but which ever one we get, we offer the services properly while we deliver the job. We don’t bid cheap. Most companies that approaches us are the companies that wants quality services and because of that we have gone out from small ball pipeline services to big ball (big diameter) pipeline services, where more sophisticated equipment are required. So that’s what we have been suffering.
What is the way forward for the indigenous companies in this complex atmosphere?
Well, you can’t really have any satisfactory way forward that is not client led, because the clients should be able to consider the estimate they would charge if they really are the ones providing the service. Considering this, whosoever they find bidding below this estimate, should be disqualified. But so many indigenous companies end up biting their fingers after bidding low for a contract.
Generally, how can you comment on the capacity of the Nigerian Indigenous companies after nine years of Nigerian Content Act?
Nigerian indigenous companies have enough capacities and many of the indigenous companies are now working outside the Nigerian shores to show that they have the required capacities. The people that work with us are moving to other countries and we keep losing them. The situation is like we are training them for the oversee Countries to recruit. We have developed good capacities in the system in Nigeria.
- To be conTiNued