Mr. Ranti Omole is the chairman/CEO of Radial Circle Group, an oil and gas service company. He is also the publicity secretary, Petroleum Technology Association of Nigeria (PETAN) – the umbrella body of oil and gas service firms in Nigeria. In this interview with reporters on the sideline of PETAN’s 2019 Clients’ Appreciation and Industry Achievement Awards in Lagos, he speaks on industry issues, EMEKA UGWUANYI was there.
What do you think are the challenges the oil service industry is facing and what is the way forward?
The first of the challenges is that we don’t have enough contracts (projects) to do. This lack of projects is impacting negatively on our members as they keep paying their staff without the inflow of fresh incomes. Besides, the overhead keeps running and increasing as there are no projects to bring in fresh revenues. Secondly, since PETAN member firms keyed into the industry’s initiative to cut down the cost of production, it means their own margins from projects will start getting thinner. Despite that our firms have different services and mix of portfolios and collaborations, they are still struggling to survive. We need catalysts, we need projects to be able to stimulate the industry because the service providers employ quite a number of people. We are a very big chain not only PETAN members but also thousands of service providers across the country supporting the oil industry. We need to get projects and that is the only way the industry can sustain itself.
International oil companies (IOCs) are complaining about the amendment of Deep Offshore and Inland Basins Production Sharing Contract Act, how do you think this will affect the oil service industry?
I think it is an amendment that the entire industry stakeholders need to sit back, reset and rework and look at how they can maximize the opportunities still available despite the changes in the Act.
Are you saying it won’t affect the oil service industry at all?
Well, if you bring in new changes whereby you begin to pay for what you were not paying for in the past, basically, it means your returns will be lower. It will reduce returns on investment. However, in a way, it is also an opportunity for you to re-evaluate and re-examine how you do business. Some of our members are looking at it as if we have to pay more royalties but let’s also know it will push us to look at ways to cut down production cost as an industry to make our operations profitable. Currently, some operators are looking at reducing production cost by two to three dollars per barrel. It is also a kind of strength to reshape the enitre system but typically, people also need to benchmark because when you bring in a new Act to amend an existing policy, you have to look at it vis-a-vis the other competing countries in Africa that are competing for the same resources in oil and gas sector. So, for us to know whether that amendments are disadvantageous or just in line with the existing framework that we have in other African countries, we need to do a chart, benchmark, compare how we stand with other countries and if we find ourselves more on the negative side, we need to address it.
What informed this year’s PETAN theme “The oilfield of the future: Operational excellence”?
Basically, what informed it is that the whole world is changing. Technology is changing how things are done all over the world. We are having smart fields, Artificial Intelligence (AI), robotics, data mining and analysis. In a way, we said we need to go with the future which is intelligent, smart fields and remotely monitored fields. The topic is apt and it is also to remind us all that we cannot continue those things we do the traditional way. Not only that, if we really want to cut down cost, technology is the way whereby you have less people, less maintenance, less field visits, smarter ways of monitoring our systems and improving the efficiency of our operations. These invariably will reduce the cost of actually running our operations. So, the topic is apt because everybody is talking about technology being the future. This started early this year at WAIPEC conference where we talked about data mining and artificial intelligence and their impacts on the sector. So it is for real and the whole industry will just have to do that.
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Are you saying PETAN members are ready for the future?
We are fully aware and ready. We are re-orientating our strategies and some of us are already getting involved in some pilot tests. We talked so much about it but the industries around the world are fully ready. In some areas, we have unmanned vessels, ships and platforms using drones for inspections. Gradually, it is catching up with the entire global industry and our members too are getting involved realising that if we don’t get involved fast, we will be left behind. Considering that most of us are oil service companies, we do lots of maintenance works. So, if robotics will replace us, we better be in charge of the robotics and be able to control and programme and use the various sensors to be able to improve our service delivery. Today, people are talking about condition monitoring system using vibrations to monitor the condition of various assets. We are getting ready because that’s the only way we can still be in business for the next 15 to 20 years.
Recently, the issue of collaboration among PETAN members to attract big contracts was raised, what is PETAN doing to address this and what has Radial Circle done in this regard?
Quite a number of us on different occasions have collaborated on bigger projects or tried to see how we can leverage our various strengths to get more. Also, we keep on engaging ourselves with collaboration frameworks and various platforms for us to be able to come together and harness our resources. Such collaboration will help us in certain areas especially where we don’t have the capability. In such situations, we actually collaborate to build on those capacities. It is the most cost-effective way and we understand that . We have few relationships that we are able to consumate and we expect there will be more as the year goes by.
What major projects are you handling at the moment?
The last big project – Egina floating production, storage and offloading (FPSO) – was just finished. The next one we are looking at now is Total’s Ikike project and others such as Bonga Southwest and NLNG Train 7.
All the projects are in the pipeline and hopefully final investment decision (FID) on Train 7 will be taken as stated by the Nigerian National Petroleum Corporation (NNPC). If they do that, it will be a game changer in the economy. It is not just a project that will impact the high class service providers, but it will impact the community people and even those beyond the vicinity as 50,000 tons of concrete may be needed and will create jobs. The project means you need to get granite from Edo and Kogi States, you need trucks to haul things to the jetties, you need to offload them.
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